Author Topic: How The Trading Platform Robinhood Started Stealing From The Poor To Give To The Rich  (Read 697 times)

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Offline Hoodat

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How The Trading Platform Robinhood Started Stealing From The Poor To Give To The Rich

An irony fit for the first month of 2021: A trading app that touts ‘democratizing investment’ reveals it’s willing to quash the little guy to keep hedge fund giants afloat.

Cody Boorman   |   JANUARY 28, 2021

A best-selling fiction author could not have spun a more ironic tale so completely representative of our time. Just as an unprecedented situation—COVID and lockdowns—unfolded over the past year and led to massive gains for corporate titans like Walmart and Amazon while governments have crushed small businesses and individuals, a new, unprecedented situation has unfolded over the past week.

Spilling off the pages of Reddit to become a substantial threat to the stock market’s stability is a microcosm of this tale of big business quashing the little guy, of Wall Street profiting despite the best, most subversive efforts of the underdogs. In short, what started out as a long stock play in a subreddit full of rocketship and “diamond hand” emojis and anti-elitist snark has fueled a form of class warfare that extends well beyond rhetoric. Big Tech and Wall Street are fighting back, and right now it appears they’re winning.

You Do Need Some Background

The background of this story may seem dry to some, but as with “The Big Short” of ’08, the full extent of malfeasance and recklessness by big Wall Street players can’t be understood without some working knowledge.  .  .  .

https://thefederalist.com/2021/01/28/how-the-trading-platform-robinhood-started-stealing-from-the-poor-to-give-to-the-rich/



Good article that provides further background.  The 'event' that enhanced Gamestop's value was the hiring of Ryan Cohen earlier this month.  Gamestop had already been shorted 140% prior to Cohen joining the team.
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Offline dfwgator

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Dennis Moore, Dennis Moore
Riding through the land
Dennis Moore, Dennis Moore
Without a merry band
He steals from the poor
And gives to the rich
Stupid bitch


Offline Hoodat

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If a political party does not have its foundation in the determination to advance a cause that is right and that is moral, then it is not a political party; it is merely a conspiracy to seize power.

-Dwight Eisenhower-


"The [U.S.] Constitution is a limitation on the government, not on private individuals ... it does not prescribe the conduct of private individuals, only the conduct of the government ... it is not a charter for government power, but a charter of the citizen's protection against the government."

-Ayn Rand-

Offline Fishrrman

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Hmmm... I'm a rube, and will ask an impertinent question:

Seems to me I heard mentioned once that the goal of corporate management was to maximize shareholder value.

So, with the stock prices (shareholder value, right?) up so high, wouldn't the best option for GameStop management right now be to simply close down the company, go out of business, and liquidate...?

Offline catfish1957

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Hmmm... I'm a rube, and will ask an impertinent question:

Seems to me I heard mentioned once that the goal of corporate management was to maximize shareholder value.

So, with the stock prices (shareholder value, right?) up so high, wouldn't the best option for GameStop management right now be to simply close down the company, go out of business, and liquidate...?

SEC has a lot of rules around selling and liquidation, not to mention company governance which is established to protect investors.  Plus most have black out periods, which of disclosed might cause a run on the stock before they benefitied anyway.

https://www.mystockoptions.com/content/are-share-sales-by-executives-and-directors-of-public-company-subject-to-securities-law-restrictions
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Offline jmyrlefuller

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Hmmm... I'm a rube, and will ask an impertinent question:

Seems to me I heard mentioned once that the goal of corporate management was to maximize shareholder value.

So, with the stock prices (shareholder value, right?) up so high, wouldn't the best option for GameStop management right now be to simply close down the company, go out of business, and liquidate...?
The process of liquidating would take far longer than it would for the stock price to come back down again.
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Offline The_Reader_David

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Dennis Moore, Dennis Moore
Riding through the land
Dennis Moore, Dennis Moore
Without a merry band
He steals from the poor
And gives to the rich
Stupid bitch

Beat me to it.  I was going to suggest the company change its name of Dennismoore.
And when they behead your own people in the wars which are to come, then you will know what this was all about.

Online mountaineer

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Rich "The People's Pundit" Baris  @Peoples_Pundit

Let @RobinhoodApp be a lesson to all. There are no such things as "free apps".
If you are NOT paying, you are NOT a customer. If you are NOT a customer, you ARE the product.
They were selling individual user trader data to hedge funders to use to manipulate trades and markets.

2:48 PM · Jan 29, 2021·
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Offline Hoodat

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So, with the stock prices (shareholder value, right?) up so high, wouldn't the best option for GameStop management right now be to simply close down the company, go out of business, and liquidate...?

The opposite is true.  Liquidating only makes sense when the stock is undervalued.  Undervaluation means that the liquid value of a company is greater than the value of the stock.  So closing the company and selling off the assets (e.g. Eastern Airlines) would bring in more money than owning and selling a majority of the stock.

With Gamestop, the currently inflated value of the stock was exponentially higher than the liquid value of the company's assets.  If they chose to shut their doors and liquidate, the value of the stock would fall to $0, and they would only be left with their inventory minus their financial debt, rent obligations, etc.
If a political party does not have its foundation in the determination to advance a cause that is right and that is moral, then it is not a political party; it is merely a conspiracy to seize power.

-Dwight Eisenhower-


"The [U.S.] Constitution is a limitation on the government, not on private individuals ... it does not prescribe the conduct of private individuals, only the conduct of the government ... it is not a charter for government power, but a charter of the citizen's protection against the government."

-Ayn Rand-

Offline Hoodat

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I find it interesting that the only politicians voicing outrage at RobinHood for manipulating the market and also cheering on the little guys at Reddit for hitting it big against Wall Street are Republicans.  Bernie Sanders and his socialist-wannabe acolytes are nowhere to be found.
« Last Edit: January 30, 2021, 03:31:07 pm by Hoodat »
If a political party does not have its foundation in the determination to advance a cause that is right and that is moral, then it is not a political party; it is merely a conspiracy to seize power.

-Dwight Eisenhower-


"The [U.S.] Constitution is a limitation on the government, not on private individuals ... it does not prescribe the conduct of private individuals, only the conduct of the government ... it is not a charter for government power, but a charter of the citizen's protection against the government."

-Ayn Rand-

Online mountaineer

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I find it interesting that the only politicians voicing outrage at RobinHood for manipulating the market and also cheering on the little guys at Reddit for hitting it big against Wall Street are Republicans.  Bernie Sanders and his socialist-wannabe acolytes are nowhere to be found.
Quote
Warren sends letter to SEC over GameStop-Reddit-Robinhood saga, calling for regulation
By Anissa Gardizy Globe Correspondent
Updated January 29, 2021, 11:57 a.m.

Senator Elizabeth Warren sent a letter to the chairperson of the Securities and Exchange Commission Friday, asking that the group explain to Congress and the public what they are doing to address the recent market activity surrounding GameStop and other companies.

The Massachusetts senator wrote that the SEC, which oversees the stock market, has failed to control “years of distortion in securities markets,” exacerbating wealth inequalities. She is asking that the SEC respond to her questions by Feb. 5.

“The Commission must review recent market activity affecting GameStop and other companies, and act to ensure that markets reflect real value, rather than the highly leveraged bets of wealthy traders or those who seek to inflict financial damage on those traders,” Warren wrote in her letter.  ...Boston Globe
Pretty sure she's not worried about the little guys here, except to make sure they never again stick it to the big Dem-donating hedgefund guys.

More on Lie-a-watha's Reddit complaints at Breitbart
« Last Edit: January 30, 2021, 03:46:56 pm by mountaineer »
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Offline catfish1957

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Pretty sure she's not worried about the little guys here, except to make sure they never again stick it to the big Dem-donating hedgefund guys.

The irony will be that the Reddit WSB guys will be the ones who get slapped and suffer the most for equity price manipulation.  Which btw has been a long standing practice of Hedge Fund Managers.   The one big difference will be these Hedge Fund Managers have $10,000/hr. lawyers and congress protecting them.
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Offline Hoodat

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If a political party does not have its foundation in the determination to advance a cause that is right and that is moral, then it is not a political party; it is merely a conspiracy to seize power.

-Dwight Eisenhower-


"The [U.S.] Constitution is a limitation on the government, not on private individuals ... it does not prescribe the conduct of private individuals, only the conduct of the government ... it is not a charter for government power, but a charter of the citizen's protection against the government."

-Ayn Rand-

Online mountaineer

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Ah, so Warren is siding with the ultra-rich hedge fund managers over the little guys.  Go figure.
Exactly. Her - and the DNC's - biggest donors. Is Chelsea Clinton's ne'er-do-well hubby still a hedgefund guy?
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