Robinhood, Too-Big-Too-Fail, and Naked Short Selling
https://www.reddit.com/r/StockMarket/comments/lbpj3f/robinhood_toobigtoofail_and_naked_short_selling/ archived:
https://archive.is/DqCec “Q. Have you heard the term "pay for hold"?
A. Yes.
Q. What's your understanding of what that
is in relation to locates?
A. I think it's borderline illegal, but
allegedly some firms would try to preborrow the
stock before they actually did it so if they wanted
to short the stock the borrow would be there.”
—Marc Cohodes Highly Confidential - Attorneys' Eyes Only, Friday, November 18, 2011 11:09 a.m.
https://archive.org/stream/328064-transcript-of-depositions-in-case/328064-transcript-of-depositions-in-case_djvu.txt Pictured below is the brokerage industry by market share
r/StockMarket - Robinhood, Too-Big-Too-Fail, and Naked Short Selling
As you can see, 50% is controlled by only three massive corporations, all of which that have access to the federal social safety net.
Richard Fisher's remarks before the Committee for the Republic, Washington, D.C., January 16, 2013.
“This TBTF subsidy is quite large and has risen following the financial crisis. Recent estimates by the Bank for International Settlements, for example, suggest that the implicit government guarantee provides the largest U.S. BHCs with an average credit rating uplift of more than two notches, thereby lowering average funding costs a full percentage point relative to their smaller competitors.[8] Our aforementioned friend from the Bank of England, Andrew Haldane, estimates the current implicit TBTF global subsidy to be roughly $300 billion per year for the 29 global institutions identified by the Financial Stability Board (2011) as “systemically important.”[9]
To put that $300 billion estimated annual subsidy in perspective, all the U.S. BHCs summed together reported 2011 earnings of $108 billion.”
archive.is/Z1DJ5
Definitely not the kind of business environment that favors bright young start ups..
To make matters worse, the CEO of one of Robinhood’s biggest competitors, Morgan Stanley, CURRENTLY occupies one of the top board seats at the New York Fed, representing the interests of the large capitalization group.
Out of the three classes of directors, two are chosen by industry — Class A and Class B.
The CEO of the Nasdaq currently occupies that Class B position.
Brokers and traders sitting on the board of the New York Fed is a relatively new phenomenon in its 107 year history—the result of rule changes legislated in response to the carnage inflicted by the 2008 global financial crisis.
But with the cards stacked so high against Robinhood, one is left to question why this small up and coming discount brokerage is being made a spectacle of by the MSM business news media. Many of the biggest players in the industry have histories going back as far as the roaring 20’s. They manage portfolios with AUM in the trillions. Their board of directors consist of some of the most powerful people in the world. Compared to them, Robinhood is but a feather in the wind.
Now for a trip down the rabbit hole.."
FULL ARTICLE
https://www.reddit.com/r/StockMarket/comments/lbpj3f/robinhood_toobigtoofail_and_naked_short_selling/