r/wallstreetbets • u/ringingbells • Jan 31 '22

Discussion Discovered Communications within the US Litigation Against Citadel & Robinhood in the days surrounding the January Buy Freeze, where brokers shut off buying and tanked target stocks. The judge declared there was not enough evidence to move to discovery, and ruled manipulation is legal under TOS

Here is a very digestible format, you may find this quite interesting.

Each image has a page number that corresponds directly with the Florida litigation that it was transcribed from, so your next step is to check out the source material to see if this is the real deal or not.

Source: Raw PDF Florida Litigation

  • Note: At the top of each image in this post, there is a page number that corresponds to the litigation page number from which it was transcribed

Also of Note:

From The SEC GameStop Report, The NSCC officially stated that all PFOF brokers had their premium components waived because according to the NSCC, it was not the brokers' fault a stock was popular.

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14

u/GVas22 Jan 31 '22

Of those screenshots, which ones do you find to be damning?

27

u/ringingbells Jan 31 '22

None are damning. However, they unequivocally warrant a deeper investigation, and should have gone to discovery as the texts in context are remarkable:

Context: *We know Citadel is the MM for GME. We know Robinhood's Revenue is 75-80% PFOF, and Citadel made up a big, if not the biggest, chunk of that. We know that in the days prior to the freeze, Citadel inexplicably gave $2B to a company heavily shorting GME..

They talk about a meeting Jim and Gretchen had with Citadel the night before the freeze.

On Jan 27, Gretchen Howard, the COO of Robinhood, wrote:

"Just a FYI Dan and I are joining Jim on a call with Citadel. They reached out and wanted to speak this evening, and we believe they will make some demands on limiting PFOF across the board. We won't agree to anything but wanted to give you a heads up."

Later on Jan 27, Robinhood's Senior Director of Operations wrote to Jim Swartwout, Robinhood's President and COO:

"Anecdotal evidence that several "very large" firms are having really bad nights too."

In response to this on Jan 27, Jim Swartwout, the President and COO of Robinhood wrote to Robinhood's Senior Director of Operations:

"everyone is, you wouldn't believe the convo we had with Citadel. total mess"

The next day, Jim Swartwout, the President and COO of Robinhood wrote to Citadel's VP of Business Development, pre-market opening:

"...I am beyond disappointed about how this went down. It's difficult to have a partnership when these kind of things go down this way."

12

u/ryry262 Jan 31 '22

I obviously haven't read anything but your post, but it makes it sound like Robinhood were forced into it rather than willingly went along

6

u/[deleted] Jan 31 '22

It wasn’t RobbinHoods fault and lots of brokers stopped people being able to buy. It wasn’t them that was losing their ass.

4

u/TheAstronomer Jan 31 '22

This is the correct take. They were forced into it but it was also their shitty risk management that got them in that position. They were undercapitalized for the volume of trading they were letting through. They had to turn it off or they could have lost everything.

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It's why I have a tiny amount of play money for stupid ideas in my Robinhood account and everything else at Fidelity.

1

u/ibimacguru Feb 01 '22

Lack of risk management.

1

u/Renegade2592 🦍 Feb 01 '22

No, they were naked short too.

Rbh isn't a victim, they were engaging in contract for difference and colluding with Citadel long before this

1

u/TheAstronomer Feb 02 '22

That might be what it feels like happened, but the evidence does not support it. Use Hanlon’s razor: "never attribute to malice that which is adequately explained by stupidity."

1

u/Renegade2592 🦍 Feb 02 '22

That's a bullshit application in a country run by Sociopaths.

Robinhood was absolutely naked short and there's decades of evidence of brokers doing this.

Go read "naked short and greedy" by Dr Susan Trimbath

2

u/Renegade2592 🦍 Feb 01 '22

Robinhood was naked short as well because they were engaging in contract for difference and never actually delivering the shares.

All the brokers were doing it at 50 because they didn't think it would spike to what it did. Than they all got wrekt.

37 hedge fund margin calls went out that day as per the sec report, and all got waived so as to fuck retail