In late January, a band of merry men (and women) organized via Reddit and other Internet forums to stick it to The Man. They began buying shares of failing retail chain GameStop to drive its stock price up.
Their target: Wall Street hedge funds engaged in the tactic of “shorting” GameStop’s stock.
Their main weapon: Robinhood, an app which allows pretty much anyone to buy stock in small amounts. Its stated mission is to “democratize finance for all.”
You’ve probably read 20 explanations of “shorting” by now, so I’ll keep it simple: To “short” a stock is to bet that its price will go down.
Hedge funds bet heavily against — “shorted” — GameStop. Robinhood’s band of merry men and women bet for GameStop by buying its shares, bringing the price up. The hedge funds lost billions.
Naturally, those hedge funds howled. And Robinhood, instead of siding with its users, sided with the funds. It shut down its users’ ability to buy Gamestop stock, pushing the price back down.
Robinhood’s terms of service specify that it “may, in its discretion, prohibit or restrict the trading of securities.” That clause may or may not sufficiently cover the company’s posterior in a legal sense. But in this application, it gives lie to the company’s name and supposed mission.
With its attack on its own users, Robinhood is stealing from the poor (or at least the poorER) to give to the rich.
In theory, the stock market is about capitalizing companies that offer goods or services, turn profits, and pay dividends to their shareholders. In reality, many traders (including large institutional traders) treat the stock market like a casino, placing short-term bets, collecting their winnings or losses, and moving on to the next spin of the roulette wheel.
Which is fine, I guess, except that the high rollers, in addition to acting as players, consider themselves “the house.” The house always wins in the long term, but instead of swallowing even this single loss and betting smarter in the future, they leaned on the cashier cage (Robinhood) to stop selling chips to smaller players who were on a winning streak, so as to force those players away from the table.
To its everlasting shame, Robinhood assisted “the house” in its cheat. Above and beyond any legal or regulatory price it pays for its perfidy, it’s also outed its own claims of financial “democratization” as deceptive hype.
Thomas L. Knapp (Twitter: @thomaslknapp) is director and senior news analyst at the William Lloyd Garrison Center for Libertarian Advocacy Journalism (thegarrisoncenter.org). He lives and works in north central Florida.
PUBLICATION/CITATION HISTORY
- “Robinhood: Stealing from the Poor to Give to the Rich,” by Thomas L. Knapp, OpEdNews, 01/29/21
- “Robinhood stealing from poor, giving to rich,” by Thomas L. Knapp, Wilson, North Carolina Times, 01/29/21
- “Robinhood stealing from poor, giving to rich,” Spring Hope, North Carolina Enterprise, 01/29/21
- “Robinhood stealing from the poor to give to the rich,” by Thomas L. Knapp, Elko, Nevada Daily, 01/29/21
- “Robinhood: Stealing from the Poor to Give to the Rich,” by Thomas L. Knapp, Ventura County, California Citizens Journal, 01/30/21
- “Robinhood: Stealing from the Poor to Give to the Rich,” by Thomas L. Knapp, CounterPunch, 02/01/21
- “Robinhood stealing from the poor to give to the rich,” by Thomas L. Knapp, Wahpeton, North Dakota Daily News, 02/01/21
- “Stealing From the Poor to Give to the Rich,” by Thomas L. Knapp, Queens, New York Examiner [web and print], 02/02/21
- “Stealing From the Poor to Give to the Rich,” by Thomas L. Knapp, Queens, New York Ledger [web and print], 02/02/21
- “Stealing From the Poor to Give to the Rich,” by Thomas L. Knapp, Brooklyn, New York Downtown Star [web and print], 02/02/21
- “Stealing From the Poor to Give to the Rich,” by Thomas L. Knapp, Greenpoint, New York Star [web and print], 02/02/21
- “Stealing From the Poor to Give to the Rich,” by Thomas L. Knapp, Forest Hills / Rego Park, New York Times [web and print], 02/02/21
- “Stealing From the Poor to Give to the Rich,” by Thomas L. Knapp, New York Leader / Observer [web and print], 02/02/21
- “Stealing From the Poor to Give to the Rich,” by Thomas L. Knapp, Long Island City / Astoria Journal [web and print], 02/02/21
- “Robinhood no Robinhood,” by Thomas L. Knapp, Orangeburg, South Carolina Times and Democrat, 02/02/21
- “Robinhood: Stealing from the poor to give to the rich,” by Thomas L. Knapp, Dillon, Montana Tribune, 02/03/21
- “Robinhood: Stealing from the Poor to Give to the Rich,” by Thomas L. Knapp, Roundup, Montana Record-Tribune & Winnett Times, 02/03/21
- “Robinhood: Stealing from the poor to give to the rich,” by Thomas L. Knapp, Claremont, New Hampshire Eagle Times, 02/03/21
- “Robinhood: Stealing from the poor to give to the rich,” by Thomas L. Knapp, Dearborn, Michigan Press & Guide, 02/05/21
- “Robinhood: Stealing from the poor to give to the rich,” by Thomas L. Knapp, Sterling Heights, Michigan News-Herald, 02/05/21
- “Robinhood: Stealing from the poor to give to the rich,” by Thomas L. Knapp, Millbury, Ohio Press, 02/05/21