Backlash would be even worse. We've already seen a "class action lawsuit" from WSB to Robinhood back in March when RH couldn't execute buy or sell during a few days and people were furious about their options expiring worthless.
People will claim they had no chance to sell GME for $250, after a few days spikes it back down to $20 or so, and they'll claim Robinhood caused them to lose $50k or whatever.
IDK about that. There's a class action regardless, and (IDK, but seems logical) a market manipulation case as well.
Honestly I don't understand how this is even a question. WTF is supposed to happen to the price of an asset if a big chunk of the owners can only sell.
It seems obvious that the claimed damages for the class action lawsuit would be much larger if sell orders were blocked. Since we know with certainty price will crash, claimed damages would increase by the share value of shareholders at time of restriction.
Sure. Make sense. There is some precedent for determining damages, and that RH are optimizing for it.
How is this not also market manipulation? Lots/most of the trades on target stocks are trading via RH. RH is restricting the access of buyers, but not sellers. How could this decision not affect/suppress prices.
I will not pretend to guess at potential liabilities of one choice or the other, but the one they made does seem to corrupt the market most.
I guess it's cliche to ask this about a financial scandal but... how is this legal? Can a broker really decide that people can either hold or sell, but not buy a stock?
Well, the far-dated PUT options for GME have almost fully priced in the impending crash at this point. The $320 Jan 2022 PUT price is at $265. I imagine there's still +10% EV at that price, but it's not as compelling as yesterday when it was $240.
