People have been attempting a short squeeze all week. Short squeezes are illegal. By allowing a short squeeze to continue with no action, Robinhood would have been taking on massive legal liability for aiding and abetting illegal activity.
Shorts got greedy and got caught out. Should short sellers not have any downside to their trades?
I guess the billion dollar question is, legally: does buying stocks in anticipation of a short squeeze, and communicating the same to others, count as manipulation?
The question I think would rotate around whether this is 'a scheme to manipulate', or simply identifying an opportunity to capitalise on Melvin's greedy position.
> Although some short squeezes may occur naturally in the market, a scheme to manipulate the price or availability of stock in order to cause a short squeeze is illegal.
Also: If a big hedge fund shorts a stock, expecting to drive its price down, that's cool. (Search "big short drives down stock price")
But if regular people buy a stock expecting to drive its price up, that's terrible.
Sorry, this position just isn't credible.
I heard (from a non-authoritative source) that the coordination on reddit, etc. is not manipulation.
Please source the following comment:
> by continuing to allow trades, Robinhood was taking on major legal risks
There is no one else sharing this talking point that I can see.
I will continue to call you a shill. Please see my comment history to understand that this user is quite interested in spreading misinformation, and given their previous topics, looks to be being compensated for doing so.
Obviously not the reason, since they posted a blog saying they did it to protect consumers from volatile stock.
It says market manipulation is illegal. It is not particularly clear whether a message board getting excited about a short squeeze does not count as something that "may occur naturally".
