Read on Twitter
1. Is @stoolpresidente making a valid argument in a necessary conversation about the inequities of the financial system, or is he getting on a soapbox to call for imprisoning people without understanding either the basics of securities laws or the issues at play? https://twitter.com/stoolpresidente/status/1354832177498873860
2. Facts: Many (if not most) brokerages place restrictions on stocks they deem too risky. They also provide margin loans to investors. That gives them added risk, as well as leverage to set rules about how that capital is deployed.
3. When a band of investors coalesce to bring about the failure of hedge funds and those funds have to sell huge quantities of winning stocks to offset those losses, it has potential to bring about a broader market sell off. (The Times piece today explains this very well.)
4. Supporters of WallStreetBets are making an argument about the inequity of Robin Hood's decision not to allow further GME trading, saying it's part and parcel of a system in which banks got bailed out in 08, while tens of millions lost their homes.
5. In this case, hedge funds get assistance, everyday GME investors lose money. That argument deserves to be heard and discussed in a country of rampant income inequality.
6. But it's also pretty obvious that no bank wants to be the next Lehman Brothers out of absolutist allegiance to free market principles. No Wall Street firm wants a Wall Street crash. Particularly Robin Hood, whose shockingly low interest rate for margin adds to its exposure.
7. When a person with millions of Twitter followers calls for people to be imprisoned, it means something. And it warrants asking whether @elpresidente has even read the agreement he entered into with his brokerage? Does he even know whether that contract has now been breached?
8. Finally, it is worth asking whether Robin Hood and TD Ameritrade bear ethical and/or legal responsibility for the decision to ban the stock midgame, causing stocks like AMC and GME to drop. But I don't know the answer to this and I somehow doubt that Dave Portnoy does either.
