For the record, why did Robinhood stop the trading? I know there's been an uproar, but due to the volume of articles it's been difficult to get a clearheaded idea of why Robinhood actually did it.
> "Brokers must post margin with the Depository Trust & Clearing Corporation and National Securities Clearing Corporation at the end of each day to ensure enough funds are reserved to cover any trading losses."
> The “meme” stonks’ volatility skyrocketed, which meant that the clearing organisations could ask for more collateral from brokers on the grounds of needing to protect themselves from additional potential risk when settling the brokers’ trades. It takes two business days to settle stocks in the so-called digital age…
> Robinhood in particular was told to come up with $4 billion, or they would not be able to facilitate any trading the following day. RH, apparently not having that much cash on-hand, said, “how about we stop trading or severely curtail trading in the stocks that are causing PAIN to various masters of the universe?” The clearing houses said, “OK, in that case, you would only need to post $700 million.” RH agreed to that figure, rushed to raise more money from the Street and/or Silicon Valley, and then subsequently shut off trading on Jan 28th and into the weekend. (This is information gleaned from an interview the CEO of RH gave to Elon Musk on Clubhouse).
So, it's the clearing houses that strongarmed shutting down the trading.
Even if he knowingly, brazenly lied, and lied worse than this, that’s a weak basis for a lawsuit by itself. You’ll need to prove some damages from the lie.
Liquidity issue. Or rather, extremely close to it.
The CEO said he "doesn't want to use the L word" to describe it.
Basically they had to cover/deposit the purchase trades themselves, before they ran out of money to do so (liquidity issue) they shut down purchasing - then went on record on CNBC etc claiming that it's not a liquidity issue.
