Robinhood Raises the Stakes By Liquidating Customers’ Positions Without Permission
We’ve all just heard that brokerage platforms like Robinhood, Interactive Brokers, TD Ameritrade and some others have blocked retail traders from purchasing shares of heavily shorted stocks that were saddling hedge funds with losses, immediately cratering the prices of these stocks by eliminating the retail bid, allowing only the hedge funds to purchase today and cover their short positions without worrying about those pesky retail investors on the other side trying to purchase shares.
Well, it appears that Robinhood has now raised the stakes by simply liquidating these positions without their retail customers’ consent, and at the low prices of the day! What a way to steal from the poor and hand to the rich…I guess Robinhood got confused about its mission of who they had to steal from. They better brush up on their reading.
Steal from The Poor, Give To The Rich? Not the Robinhood Way!
Below is a letter to a Robinhood User who was told that their shares in GameStop (GME) were liquidated automatically, without their consent, at $118.93 – the stock closed today, January 28, 2021, at $193, and is trading at nearly $320 after hours as we write this:
Now the stock traded as high as $483 today so I guess it would’ve been alright if Robinhood would’ve cashed this poor customer out at that price for a total of $2,173,500, but no, profits are not collected by retail on Wall Street, instead they cashed this (now) poor guy at 118.93 per share, or $535,185 – handing over a cool $1,638,315 of this (now) poor customer’s money to the Man, or the short hedgies on the other side. Well perhaps they were kind, they didn’t cash him out at $112.25, the low of the day.
So for those that can’t read the post, the note states: “In light of recent volatility, we are restricting transactions for certain securities to position closing only. However, due to the unreasonable risk involved in brokering your position, we have closed your 4,500 shares of GME for an average price of $118.93 on January 28th, 2021 at 11:24AM.” (Pic via Twitter.)
This was an electronic note a Robinhood Trader received this morning. Imagine that? Not only has Robinhood, among other trading platforms, severely restricted their users buying options, but now they are taking it upon themselves to cash their own users out and hand the difference to the Man! This is a new low, even by Wall Street standards.
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What is Wall Street Bets?
For those of you who haven’t been following this crazy Reddit-Gamestop-Hedge Fund- Stock Market fiasco, Gamestop (GME) was trading at a record high of $483 this morning, before falling sharply to $112.25 as soon as the retail bid was taken out via Robinhood and other trading platforms.
This whole thing really got underway a few days ago, when a little-known Reddit message called “WallStreetBets (a subreddit) hit the scene as they tried turning the tables on hedge funds and billionaires alike. The message board which took about 7 years or so to build up 2 million followers, more than doubled its followers to over 5.1 million in the last few days. Its plan was to find stocks heavily shorted by hedge funds and take the other side of the trade, hoping to make the deep pockets cover at higher prices. This is a strategy well known and exercised for decades by sophisticated traders such as Carl Icahn, Bill Ackman and Dan Loeb and other billionaires (Recall the Herbalife affair?).
The difference this time is the retail investor, the little guy, tried to make a bit of dough using this identical strategy. What a plan, huh? Well, not quite. The big dog bit back. The flaw in the plan is the realization that only billionaires are allowed to make money on Wall Street. If a retail investor so much as even tries his hand at this or any other strategy, he loses.
How? Simple. The game is rigged. Just block his brokerage account when he makes money, sell him out at a loss on the low of the day, and hand the difference to the hedge fund shorting on the other side. Would any brokerage firm even think of trying this on a billionaire like Carl Icahn? Never! They would be sued, in jail, or shut down that day.
Some sympathetic billionaires and sharp politicians noticed this, saying:
Now, you know things are bad when AOC and Ted Cruz are agreeing with one another. (All pics via Twitter.)
Editor’s Note on Robinhood’s Antics
Well, the fun appears to have only lasted a few days as Wall Street quickly put an end to any retail investor hoping to make a buck. Various trading platforms (including the popular Robinhood TD Ameritrade and WeBull) closed out buying opportunities on many of the targeted stocks, sinking their prices and making the little guy squirm yet again. It seems like the Wall Street machine is back in control again and putting the little guy in his money losing place.
We should all be aware that investing in the stock market is a risk, but foul-play such as this is simply unfathomable.
Have you been affected by Robinhood’s actions? Tell us your story!