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Comment by content_sesh | Hacker News Reader

Maybe if Robinhood had done literally anything to not appear like they were colluding with their customer Citadel people wouldn't have constructed "false narratives". Its some impressive mental gymnastics to see a broker lock out all of their retail investors (remember, you were completely free to liquidate your position) and offer almost no explanation, and blame the investors for being hasty and jumping to conclusions.

And for that matter, calling these narratives false seems premature. As far as I know there hasn't been any actual investigation by regulators into the reason Robinhood took those steps (although multiple politicians from across the spectrum have called for one). It seems many public figures would love to give Robinhood the opportunity to explain themselves

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> Its some impressive mental gymnastics to see a broker lock out all of their retail investors (remember, you were completely free to liquidate your position) and offer almost no explanation, and blame the investors for being hasty and jumping to conclusions.

People don’t seem to realize that brokerages do this all the time to limit their risk. If you have less than $25k in a trading account for example, a brokerage is mandated by law to not allow day trading (that is entering and exiting the same position on the same day). Do you know what happens if you do? You are labeled a pattern day trader and you can only exit positions. Actually the fact that they were letting people exit trades was a big clue to me that this was risk mitigation while this collusion with citadel narrative was making the rounds.

The motivation is one thing, the end result is that it created a slanted playing field where one party was blocked from buying, but not selling, and the other party (the losing short side) could do either unrestricted. Not only that, but it was pre emptive. We can talk all day about GME, but the handful of other names like BB hadn't even reached that point. There was simply a risk of a short squeeze and we slanted the field here, too, enough time for the losing side to mitigate their risk.

Conspiracy or no, the end result is so far from your day trading 25K minimum example. Your example is a rule that already existed going in, rather than a rule that changed temporarily to convenience one side for a day.

But why did RH lie about it then? That's the smoke that most people see.

> Actually the fact that they were letting people exit trades was a big clue to me that this was risk mitigation while this collusion with citadel narrative was making the rounds.

Ok let's say I'm a retail investor using RH. Why should I need to divine what my brokerage is doing from Twitter posts and Reddit? My should I need to wait hours for their explanation that comes in the form of a handwavey blog post?

You shouldn’t, and I’m not defending RH’s handling of a PR crisis, which is never easy and one that every successful company eventually encounters at some point. I don’t use RH personally. My guess is they had problems with collateral obligations but didn’t have their arms around the problem so the immediate solution was to pull the plug until they could get their affairs in order. This by the way isn’t the first time they’ve had these problems. A lesser known story in wsb lore was ironyman who a few years ago opened so many box spreads before RH knew what was happening that he turned an initial $500 account into a $50,000 loss. That should never be able to happen obviously but RH was ill prepared. It’s clear in hindsight that something like what’s happening now or worse was almost inevitable. They seem to take move fast and break things to another level. The problem is that when you don’t dot your i’s in the stock market you can be fine for years and then one day get carried out in a casket. I surely would never consider using RH at any point.

My point was that a mob formed instantly with false narratives about what was happening. It’s clear now that these moves are entirely due to risk mitigation and that it had nothing to do with collusion with Citadel to cheat people. So the conversation has shifted from outright collusion to cheat retail investors to one of terrible communications.

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