The United States legal system continues to serve corporations, which should come as no surprise to anyone who has had to deal with corporations in a courtroom. The latest example of the United States protecting elitists and corporate interests over regular Americans was when a federal court dismissed claims that Robinhood wrongly restricted ‘meme stock’ trades on Friday.
Here’s what Reuters wrote about the ruling:
In her 66-page opinion, Altonaga (the federal judge presiding over the case) wrote that while traders were ‘gravely disappointed’ by the plunge in meme stock prices that occurred after trades were restricted, ‘the law does not afford relief to every unfulfilled expectation.’
That is a bunch of bullshit.
To explain why it’s bullshit, there needs to be an explanation of what went down last January, when Robinhood restricted the buying of meme stocks. (I’m not here to rehash the story, but here’s some background.)
In an article on January 28, 2021, Maggie Fitzgerald of CNBC wrote the following:
“Retail brokerages restricted trading on Thursday in GameStop and other stocks caught in a frenzy that has captivated Wall Street and caused big losses for hedge funds.
Free-stock trading pioneer Robinhood and Interactive Brokers said that in some cases, investors would be able to sell only their positions and not open new ones. Both brokerages raised margin requirements on certain securities. Robinhood told clients in a blog post that it would close out some positions automatically if the client was at risk of not having the necessary collateral. The Menlo-Park, CA based said it plans to allow limited buys of these securities on Friday.
After the announcement, shares of GameStop initially reversed their gains, sliding quickly into negative territory. The stock, which traded above $500 at one point in premarket trading, closed down 44% on Thursday.”
The key to that snippet from the CNBC story is that last paragraph. After Robinhood restricted the selling of the stock, GameStop stock fell by 44%. In second grade, I learned about cause and effect. That lesson seems to apply here.
However, a United States federal judge ruled that this was not market manipulation.
In fact, it was deemed legal.
Now, you may be asking what market manipulation is. Here’s how Investopedia defines the term:
“Market manipulation is the act of artificially inflating or deflating the price of a security or otherwise influencing the behavior of the market for personal gain. Manipulation is illegal in most cases, but it can be difficult for regulators and other authorities to detect, such as with omnibus accounts.
…In market manipulation, the manipulator tries to influence the market to raise or lower the price of an asset so that it differs from the true price implied by market fundamentals. Anytime there is a difference between the market price and the true price, (it is undervalued or overvalued) this represents an opportunity for profit through simple arbitrage or more complicated means.”
Now that definition is confusing.
I guess us regular folk are too stupid to know what we’re doing regarding the stock market, so Robinhood came in to save the day.
Thank God for Robinhood!
How does market manipulation apply to Robinhood and meme stocks?
Robinhood users were unable to buy new shares of GameStop because Robinhood refused to allow its users to buy it. However, Robinhood allowed its users to sell back their GameStop stock. That’s the manipulator, Robinhood, stopping its users from opening new positions (buying more GameStop stock/the asset) but still allowing its users to sell back the stock of GameStop they currently owned.
Why could Robinhood users sell their stock, but not be able to buy more? Why did Robinhood prevent this?
“Free markets” run on supply and demand. That’s the basis of capitalism, or so I’ve been taught. If either the supply or demand is restricted and/or blocked, it seems that would have an effect on the market, which Robinhood’s restrictions clearly did, as seen by GameStop’s price falling by 44%.
I emphasize that Robinhood only restricted the buying of the stock, not the selling back of the stock. Reread that definition of market manipulation. Shit. I don’t even have a law degree but blocking the buying while allowing the selling of a stock seems like textbook market manipulation of our country’s “fair and free” market. Especially considering the restriction caused GameStop stock to fall nearly fifty percent in price.
But Robinhood and this corporate lapdog serving as a judge deemed this legal.
Here’s what makes this ruling worse.
Altonaga pointed out that all traders who used Robinhood consented to a customer agreement that states the app can restrict trading.
A judge ruled that it was legal to restrict trading of a stock in a “free market” because users of Robinhood agreed to one hundred pages of five-point font that no one could understand without a law degree and microscope? That makes market manipulation legal?
Of course, the lawyers, capitalist pigs, and corporate shills are defending the court ruling. Each providing the same reason:
The customer agreement clearly states that Robinhood could stop trades when deemed necessary (or some other variation of that bullshit).
So, if there is a user agreement it’s valid and lawful for a company to protect its own interests to manipulate the “free market”? Because that’s what Robinhood did.
Is that capitalism?
Is this how a “free market” works?
The stock market is purposely complicated. It’s also not explained to those of us who went to public school. For those of you who are struggling to comprehend the significance of this ruling, let’s demonstrate an example of how ridiculous this is.
Let’s say I make an app and in my two-hundred-page user agreement which is written in three-point font by some corporate-puppet lawyer, I add a clause. This clause states:
“By signing this agreement, I’m allowed to show up to the signee’s home or place of work and punch them in the stomach three times whenever I desire.”
According to this federal judge’s ruling, that’s perfectly legal. You see, in law there are consequences to rulings. They are called precedents.
“Precedent refers to a court decision that is considered as authority for deciding subsequent cases involving identical or similar facts, or similar legal issues. Precedent is incorporated into the doctrine of stare decisis and requires courts to apply the law in the same manner to cases with the same facts.” – Cornell Law School
If you’re thinking that even if you sign my user agreement, I am still committing assault, I say to you:
It’S iN tHe UsEr AgReEmEnT.
It’S a LeGaLly BiNdInG cOnTrAcT.
So, what can we do about the slimeballs at Robinhood?
The courts aren’t going to help us.
Neither will the politicians. (That’s a story for another day, which will be very soon.)
There’s only way to speak to these slimy elitists.
Make their wallets a little smaller.
It’s the only thing they respond to.
I’m not a financial advisor, but if you or a loved one have money/stocks in Robinhood, pull it out. Make them pay for their manipulation of the market by bankrupting the bastards.
Here are some other apps/services that offer stock trading:
I did a Google search to find these. So, if these companies suck, bitch about it in the comments. I might update this list after I read over a thousand pages of user agreements, but who was time for that … which I think is the point of these agreements.
If you want to learn more about this fiasco and the United States stock market, don’t go to r/wallstreetbets. It’s nothing but a bunch of apes trying to take diamonds hands to the moon or something.