Hedge Funds Pay to Lock out Retail Investors from Trading Gamestop

[freedomno1]

Was checking out the news today about how Hedge funds can trade stock while retail investors on Robinhood TD Interactive Brokers were all put into a timeout
Seems like a very clear case of market manipulation as the Hedge Funds shorts are due to expire on Friday and they purposefully limited the trading in order to maximize their own pocketbooks.

From a David vs Goliath perspective, what is your interpretation of the latest debate in the Gamestop Saga?
Is it right for the major traders to suspend all users to protect a few hedge funds?

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[suchmoon]

When the kids on Robinhood inevitably lose their money in the GME pump, which is essentially a mad ponzi scheme (more mad than the usual stock market that is) they and their parents will be crying why Robinhood didn't protect them from the scam. Brokers can't win in this scenario. They're taking a path that they consider less risky but time will tell how this will work out for them. I suspect that the SEC is going to go after the reddit group who will complain that it's the big bad Wall Street retaliating.

[freedomno1]

When the kids on Robinhood inevitably lose their money in the GME pump, which is essentially a mad ponzi scheme (more mad than the usual stock market that is) they and their parents will be crying why Robinhood didn't protect them from the scam. Brokers can't win in this scenario. They're taking a path that they consider less risky but time will tell how this will work out for them. I suspect that the SEC is going to go after the reddit group who will complain that it's the big bad Wall Street retaliating.

I don't know I think the SEC may very well go after the Hedge Funds and the exchanges for market manipulation and trade restrictions, it is pretty clear that the funds they targeted are all ones with a large amount of short capital.
Plus they were all coordinated into the same action on the same date. As we know Wall Street has hardly been fined for pulling stunts like these in the past, if anything these YOLO players probably took more money from them calling their naked shorts than the street has been fined by the SEC.

In essence, this is not about retirement plans it's about a bunch of firms playing shorts and the SEC would be in trouble as well for allowing firms to have Naked Shorts after 2008 when they were made illegal.

I'm interested in how this saga will keep playing out, stock market has been a ponzi scheme for years, however, I think the brokers in playing the game flipping the table may well end up feeling the burn on this one.

https://www.inputmag.com/culture/robinhood-has-sided-with-wall-street-locked-down-amc-gamestop-trades

One has to ask, who is Robinhood trying to protect from "risk" exactly? Not Robinhood itself, which makes more money the higher the volume of trades on its platform. Surely not retail investors, who Robinhood's been only too happy to let bankrupt themselves with risky bets. It can only mean risk for those poor hedge fund managers, some of whom have had to retreat to their backers, tails between their legs, and ask for bailouts because they were overleveraged with other people's money.

[suchmoon]

I'm interested in how this saga will keep playing out, stock market has been a ponzi scheme for years, however, I think the brokers in playing the game flipping the table may well end up feeling the burn on this one.

There are very strict rules regulating financial advisors - for a good reason because stock market scams existed long before Reddit or even the Internet - and from what I've seen on WallStreetBets they're so far out of their depth that it's not even funny. They will either get a book thrown at them or will get sued by victims directly and I don't mean the hedge funds...

If the SEC also goes after naked shorts - more power to them, but that doesn't change the fact that GME is basically bankrupt and obsolete.

[franky1]

i never seen robinhood as a proper investment gateway. i always seen it as a gamblers platform. they dont play by the same regulatory rules of proper(traditional) stocks gateways. so i stayed clear of them.

what does surprise me is that they gained alot of power in just a few years. im surprised how easy they can cause market concerns yet being such a young platform.

i guess robinhood will tweak its algo to not allow such market manipulation to occur again. because it seemed to have happen too easily

[freedomno1]

I'm interested in how this saga will keep playing out, stock market has been a ponzi scheme for years, however, I think the brokers in playing the game flipping the table may well end up feeling the burn on this one.

There are very strict rules regulating financial advisors - for a good reason because stock market scams existed long before Reddit or even the Internet - and from what I've seen on WallStreetBets they're so far out of their depth that it's not even funny. They will either get a book thrown at them or will get sued by victims directly and I don't mean the hedge funds...

If the SEC also goes after naked shorts - more power to them, but that doesn't change the fact that GME is basically bankrupt and obsolete.

True, the stocks that got pumped are all places 90 kids went to hang out, except for Bed Bath and Beyond ...
It could be tough to prove the case, for regulators to show that traders, whose efforts appear to have been out in the open, sent false price signals.


https://finance.yahoo.com/news/this-is-unacceptable-aoc-and-others-side-with-retail-investors-slam-robinhood-and-wall-street-amid-game-stop-mania-171906758.html

Think it's those same strict rules that will get the Financial advisors in trouble as they went into the political realm, pretty much a free market debate.
They may be idiots pumping a stock however who's to say that they need gatekeeping.

As Robinhood and other brokerages halted buying of Gamestop (GME), AMC (AMC) and other stocks Thursday, only allowing users to sell their positions, a wave of anger — and accusations of hypocrisy toward Robinhood — washed over parts of the trading community.

Hedge funds could buy and sell, but on many platforms, retail investors could only sell.

“This is unacceptable,” AOC tweeted on the news. “Fully agree,” Ted Cruz responded.

In a statement Thursday, Democrat Rep. Ro Khannna of California also supported the small investors’ rights to buy.

“This entire episode has demonstrated the power of technology to democratize access to American financial institutions, ultimately giving far more people a say in our economic structures,” he wrote. “This also showed how the cards are stacked against the little guy in favor of billionaire Wall Street Traders.”

“While retail trading in some cases, like on Robinhood, blocked the purchasing of GameStop, hedge funds were still allowed to trade the stock,” Khanna added.

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I loled at this line

When @AOC and @DonaldJTrumpJr are on the same side you know you fucked up @RobinhoodApp pic.twitter.com/y15FBqrUu9

[Broly46]

What would you do when your bank restrict your access to you own banking account? Yup raid the bank headquarter for an instant.
Stock trading? I’m not sure there is any headquarter for trading firms, yup it’s nasty little pest and stock investors has absolutely no control at all in a situation like this. They are vulnerable just like any crypto exchange which steal user crypto fund and lock their access, you could possibly relate stock exchange to that of scammy crypto exchange, they’re both ran by disgusting human being.

[Mauser]

The thing about RobinHood trading is that everything is free, so the company is not making any money with their customers (the people who use their app). So the people using their app aren't really the "customers", in reality they are the "product" the company is selling. RobinHood is selling the trading information of retail traders to big hedge fund firms who then are able to exploit it and make a profit of it. With not allowing to trade in Gamestop now it is just a move to protect their business and their really clients the Hedge Funds, as they are the once paying the bills.

[freedomno1]

The thing about RobinHood trading is that everything is free, so the company is not making any money with their customers (the people who use their app). So the people using their app aren't really the "customers", in reality they are the "product" the company is selling. RobinHood is selling the trading information of retail traders to big hedge fund firms who then are able to exploit it and make a profit of it. With not allowing to trade in Gamestop now it is just a move to protect their business and their really clients the Hedge Funds, as they are the once paying the bills.

They do make a killing from the order flow
https://youtu.be/tAO-Ff7_4CE?t=258

Also ran out of leverage so this will be fun once Robinhood antes up were not done with this story yet
https://finance.yahoo.com/video/heres-why-robinhood-restricting-users-173049721.html

And short ladder attacks lot of moving pieces
https://seekingalpha.com/instablog/11442671-gerald-klein/3096735-anatomy-of-a-short-attack