[dcftoapv]

I love options trading, but I used to work for an options exchange. I don't write uncovered positions because I can't afford the tail risk.

/r/wsb, on the other hand, loves tail risk, long or short. That subreddit needs to be shutdown by the SEC. It's serving as an investment advisor for a significant number of young people, whether it masquerades as satire or not.

[leetcrew]

> /r/wsb, on the other hand, loves tail risk, long or short. That subreddit needs to be shutdown by the SEC. It's serving as an investment advisor for a significant number of young people, whether it masquerades as satire or not.

I think this would set a bad precedent. the "advice" on wsb is mostly terrible, but if a bunch of trolls posting loss porn can be construed as an "investment advisor", I'd hate to see what other sorts of irresponsible speech can be shut down. if I give you shitty legal advice, I might be "acting as a lawyer" in some sense, but I'm not actually a lawyer and I shouldn't be subject to the same liability as a real lawyer.

[dcftoapv]

It is illegal to provide investment advice and sell investment products without license for a reason. This young man is exactly that reason. People are stupid and they trust other stupid people.

[leetcrew]

AFAIK, it is only illegal for a layperson to give investment advice without a license if they are doing it for compensation or if they mislead the recipient into believing you are a professional advisor. my guess is most people on wsb do not meet this criteria.

[dcftoapv]

Maybe, but the spirit of the law was intended to prevent incidents exactly like this

[leetcrew]

you're only liable for the advice if you meet the criteria for an investment advisor under the Investment Advisers Act of 1940, which involves actually getting paid somehow for the service. [0] I'm not an expert on the topic, but I can't see how you could possibly construe this as being intended to regulate informal discussions among laypeople. if so, why would they write the whole law around the responsibilities of investment advisors and specific criteria for being one?

similar liability exists for other people who give advice in a professional capacity (eg, lawyers, doctors, engineers), but I can't think of any situation where a layperson would be held responsible for bad advice.

[0] https://www.investopedia.com/terms/i/investadvact.asp

[brockwhittaker]

This is why we in theory have regulations preventing uninformed traders from using options, which RH has effectively skirted around.

RH is taking the same advantage that Juul got – free marketing and a lot of young people abusing the product. Wondering if they'll get the same crackdown as well.

[beervirus]

> This is why we in theory have regulations preventing uninformed traders from using options

Do we? It's not like you have to be an accredited investor to buy and sell options.

[mattbeckman]

I don't frequent /r/wsb, but the onus should not be on the SEC to clamp down on a community, it should be on the service the "significant young people" are using to execute satirical investment advice.

For example, if Robinhood wants to gamify everything, then advanced trading opportunities should be part of some built-in experience-based level up system. E.g. you can't trade options until you have made X classic trades, or after you've completed X days of simulated advanced trading.

[filoleg]

> advanced trading opportunities should be part of some built-in experience-based level up system

It already is a thing on all brokerages, including RH. If you go into your portfolio in the app, there are different option trading levels (which is standardized across the industry), and you can get upgraded to the next level as you do trades over time. You cannot just jump to level 3 as soon as you install the app. While I cannot comment on how their algorithms for upgrade eligibility work, it already exists in the same shape and form as on all other brokerage services.