Prediction: the reason why Robinhood has been forcefully closing out client's GME positions will turn out to be because some or all of those GME positions didn't actually exist.
Unlike Bitcoin, there's no way for average investors to know if the numbers on their screen correspond to actual shares. You need crypto for that.
I'm not 100% confident this type of fraud and/or incompetence is happening. But I'll give it >50% probability.
@NunyaBidness https://twitter.com/joemccann/status/1354859879337320452
Looks like this is certainly extending to outstanding orders being cancelled; unclear if it's going as far as forcefully selling positions.
@NunyaBidness That sounds like a question for the lawyers...
@pete Didn't even think of this but of course it makes sense and is highly likely. 🤦♂️
@GrandVizierOfMalta Don't underestimate the chance it's happening due to incompetence! Financial systems are ridiculously complex, and there have been many cases where shares got double-booked.
@pete @GrandVizierOfMalta oh man and it’s all closed source code only ever read by a few people. I used to write software for banks years ago. scary stuff, i’m glad i left it alive
@lucash_dev @GrandVizierOfMalta I remember once getting shown the Holy Excel Spreadsheet that was the sole authoritative record of share ownership for a multi-billion dollar fund.
They did one thing right at least: they kept the spreadsheet on an air-gapped computer sitting in the middle of an empty room with a dedicated security system to keep track of every single person who entered and left. It was probably backed up religiously too.
But still... Excel... 😱
@pete @GrandVizierOfMalta not to brag, but i’ve seen worse.
like billions in fees controlled by an MS Access DB full of custom code that only a single guy knew how to use — and the guy was a few months away from retirement.
They ended up just not charging the fees. A year later they realized that was a mistake and spent millions to develop a new system from scratch.
@pete @GrandVizierOfMalta though to be fair I think something fishy was going on, it might be just 90% incompetence.
@lucash_dev @pete LOLOL. Whoa. that's bad.
@pete @lucash_dev The incompetence is monumental!
@pete I wish there was a good explanation on how the equities custody works for banks and investment companies. I frankly don't even know if I am able to move shares between my accounts at, say, etrade and ameritrade
@pete Total short GME positions were 130% of total shares as of this morning. Since shorting is just (1) borrowing a stock and (2) selling it to someone else, this means that total long positions had to be at least 230%.
So, yeah. Most of these shares do not exist.
@preston nah, you're missing something important: after you sell the share to someone else, it can be reborrowed and sold in yet another short.
Now, if your broker is letting the shorts borrow the shares, that's similar to the shares not actually existing. But not quite.
@pete