[mattbrewsbytes]

I think there is an element of naivety ON Robinhood with how the clearing house (DTCC) could demand deposit money from RH. I feel like RH might have been bullied to shut down buys on those securities and the absence of the clearing house involved in this hearing is a huge miss.

RH could have done multiple things to avoid this: stopped sign-ups, delayed trades on all new accounts or simply exceeded required deposit ratios so that the clearing house couldn't demand things of them.

There were significant shorts that were essentially unfolding. Ryan Cohen became involved with GameStop and the potential for a new direction of the company possibly raised the price up to the $20-40 range. Over-shorts would have corrected themselves with the skyrocketing price that day and then GME would likely have returned to the $20-40 range it was in prior. That is just things playing out on the market, not manipulation.

Some of the research I've been doing over the past few weeks has revealed that for all retail trading, there are conflicts of interest from the retail broker all the way up the chain to the clearing house. Similar concept in social media where the user is the product. There is a former investment bank trader/portfolio manager that has some videos on this - caveat that he also sells classes now. Search for 'anton kreil retail trading' for some insights.

[manfredo]

New leadership prompting a 5-10x increase in valuation? Dubious. And Robinhood didn't shut down trading at $40. They shut it down in the $300-$400 range. To be frank, anyone that thought this price was driven by people who genuinely thought gamestop was worth that much is just willful ignorance.

There was no good option for Robinhood. Keep trading open? Be complicit in a pump and dump. A pump and dump that may be legal by virtue of the fact that it's decentralized, but it's still a pump and dump and Robinhood probably doesn't want to take it's chances. Ban both buy and sales, and people lose money because they can't sell their positions. This is worse. Doing what they did was the best option. Not a good option, and one that still left a lot of people unhappy. Sometimes the best option is still a bad option, it's just the least-bad option.

[mattbrewsbytes]

A pump and dump is a scheme done on purpose with misleading or exaggerated statements to boost a price while holding a significant amount of shares and then sell the shares at some peak [0]. Wolf of Wall Street got caught with a pump and dump. This wasn't a pump and dump.

When a stock is shorted 140% of its outstanding shares it's simply a supply/demand math problem. Eventually those short positions come due via whoever owns them paying too much interest or a margin call and they have to buy actual shares. This demand for shares makes the stock go temporarily up when there aren't enough shares to go around. This happened with VW in 2008 and they temporarily became the most valued company on the planet via a short squeeze [1]. It is a simple supply/demand market correction.

Retail traders, and I'm certain other large investment firms with huge amounts of capital, tuned into this and bought shares knowing that the situation would resolve itself. There are a half-dozen other stocks with similar but smaller short percentages.

Robinhood is doing the opposite of their name, they give people an outlet to dump their money and risky features to lose it quickly. They have been fined by the SEC [2] for not disclosing revenue sources and "provided inferior trade prices that in aggregate deprived customers of $34.1 million" they take deposits from the ignorant, let them do risky things which give their money to Wall St.

[0] https://www.investopedia.com/terms/p/pumpanddump.asp

[1] https://www.autoweek.com/news/industry-news/a35340727/heres-...

[2] https://www.sec.gov/news/press-release/2020-321