Robinhood and Citadel Colluded Night Before Trading Restrictions
The U.S. House Committee on Financial Services just published a press release stating Robinhood and Citadel Securities engaged in ‘blunt’ negotiations before the trading of ‘meme stocks’ occurred.
The press release states that talks regarding lowering PFOF (payment for order flow) rates happened just a night before trading restrictions.
The “GameStopped” report issued by the U.S. House Committee on Financial Services greatly details how the NSCC saved Robinhood from defaulting due to failing to meet collateral obligations.
This article is going to highlight key points relating to the ‘meme stock’ halts that occurred in late January of 2021.
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GameStopped Report – U.S. House Committee on Financial Services
The GameStopped report highlights Robinhood’s lack of liquidity, conversations between Citadel and Robinhood, and the process leading to the halting of ‘meme stocks’ such as AMC and GameStop.
On January 28th, 2021, Robinhood routed orders to six market makers for equities: Citadel Securities, G1 Execution Services, Morgan Stanley, Two Sigma Securities, Virtu, and Wolverine.
Citadel, Morgan Stanley, and Wolverine are short on AMC to this day.
The conversations between Robinhood and Citadel were tense as the two negotiated the price of PFOF rebate rates and price caps for AMC and GameStop.
Furthermore, Robinhood received a massive waiver of its deposit requirement from the DTCC.
And according to the report, without this waiver, Robinhood would have defaulted on its regulatory collateral obligations.
NSCC officials say the waiver was necessary to avoid systemic risk to the market.
They explained that the extraordinary spike in ‘meme stocks’ contributed to increased clearing fund requirements for several firms.
Brokers halted the buying of AMC, GameStop, and other tickers when short sellers began to close their short positions, causing share prices to skyrocket.
The halting occurred due to a lack of liquidity where certain brokers were unable to cover the minimum collateral requirements.
The DTCC waived a total of $9.7 billion of collateral deposit requirements on January 28, 2021.
Global Head of Operations at Citadel Has a Board Seat at DTCC
David Inggs is Global Head of Operations at Citadel and is responsible for all products across asset servicing, billing, cash management, clearing, and has a board seat at the DTCC.
The conflict of interest has raised big concerns amongst the retail investor community online as Citadel has been a leading and one of the biggest short sellers in the stock market.
On January 28th, 2021, The DTCC waived $9.7 billion of collateral deposit, limiting institutional losses and limiting retail profits during the ‘meme stock’ frenzy.
The organization allowed several naked shares to flood the market prior to the massive jump in share prices only to help financial institutions in the end.
Citadel and Melvin Capital who shut down last year, lost billions during the event.
Melvin was crippled throughout 2022 from its severe losses in GameStop the year prior.
Had the DTCC not stepped in, the hedge fund would have closed that same year.
Retail Feels Cheated
Retail investors feel they were robbed when brokers took away the ‘buy’ button by restricting trading in AMC, GameStop, and other ‘meme stocks’.
The DTCC jumped in and saved Robinhood from defaulting, cut Citadel’s losses short, and prevented retail investors bets from reaching maximum potential.
No one has been held accountable for these actions primarily because the system is justifying the actions as saving the market from total collapse.
But the system stole from retail investors to save institutional investors.
Regulators intervened to save institutions while they capped retail investor gains.
Still, hedge funds lost billions of dollars during the process.
GameStop broke Melvin Capital.
The hedge fund was not able to recover from its massive losses and has now shut down.
But Citadel nor Robinhood have faced any severe consequences that money can’t buy them out from.
Retail investors are now looking at our government and regulators as complicit to fraud and market manipulation.
You can view the full detailed report here.
What are your thoughts on the incidents that occurred during this time?
Leave a comment down below.
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Show Commentswhy did you omit the fact that Robinhood and Citadel won the lawsuit against this already?
https://franknez.com/federal-court-judge-is-tied-to-defendant-in-robinhood-and-citadel-case/
Is there anything new here on 1/15/2023, or is this just a repost of an old article? If the latter, would be good to state such at the top.
The beginning of the article states “This article is going to highlight key points relating to the ‘meme stock’ halts that occurred in late January of 2021.”
There comes a time when a corrupt government refuses to uphold the law, allowing robbery in broad daylight. At that time, U.S. citizens have been known to find a rope, and a tree, and hang a motherfucker themselves.
Well said, corruption runs deep in our financial system!
As the rich become more powerful, they gain more and more Influence to solidify their power. GameStop is an economic revolt, very much deserved. The central banks have too much power and eventually enough people will stand up to make change. It may take an entire collapse but it will inevitably happen
How dare you.
Don’t get distracted by all the AMC in this article. Here’s a video explaining why AMC is constantly thrown into the GameStop saga… Facts!
https://youtu.be/wesfnu0h3Ik
Was that the only answer? If it was in defense of the market whole why was retail the only ones that bore the brunt? There should have been a run up allowed to happen that maximized the cost to the hedge funds. It should have been allowed to break the back of those funds involved. Then the DTCC could have negotiated a price similar to the Porsche/ VW scandal. But no, retail was once again the fall guy for all the wealthy elites. But what do I know, I’m just an unwashed, deplorable Ape. To quote Mr. Buffet “the worst thing that ever was allowed was retail investors “ . Why you ask? That is a question that needs answered. If indeed it is the wealthy wanting to continue to fleece the poor by controlling all of their investments through Brokers and the insane percentages they want to pay to the retail investors, NO! What needs to happen is the monopolistic Citadel and Susquehanna groups and their ilk need a true regulatory authority that can not be bribed and back door deals effected by ex employees being appointed to its board and by the extreme corruption evidenced by these proceedings and the DD done by millions of Apes!
gnats, but I agree 🙂
There should be a federal stimulus check to all Apes robbed by this action, with funds taken out of Kenny G’s Cayman Islands account.
I’m all in for THE REVOLUTION!!!
Amen!
All PFOF brokerage apps we’re created so that market makers could steal money from a new generation of retail investors. We have become a product being sold to Citadel and Virtu. They set up a system where people who have more than they could ever need, steal from people who are in a daily struggle for financial freedom. People like Ken Griffin, who have billions, manage hedge funds worth hundreds of billions, and then also get to play market maker and control liquidity. (BTW, What happened to supply and demand? ie-Infinite Liquidity= Infinite Supply). People like this need to be put in check but the officials that are supposed to do that are either incapable, incompetent or complicit. The American people(99%) are a piggy bank for the federal government and the elite(1%). It is no longer a government of the People, for the People, by the People. It has been corrupted into a government of the elite, for the elite, by the lobbyists. The majority of career politicians are multi millionaires. Most either always have been, or have been long enough, that they have no idea what it’s like to struggle to make ends meet. Meanwhile, the vast majority of the citizens they govern, struggle with it daily. How can they possibly relate? Not that most of them even care to try. Corruption and greed have gone unchecked for far to long. But now the Apes are here and we have become a hivemind millions strong. We’ve dug deep into the plumbing of the financial system and exposed these pathologically greedy traitors to the American people. For over a year and a half we’ve researched and shared our DD. We took their scheme to steal from us with PFOF and spun it around on them. It blew up in their faces and now we’re here to stay and exposing the lie know as “The Free Market”. They colluded and bailed each other out. Citadel and Virtu flooded the market with IOU’s that became FTD’s(2,600,000 last month) avoiding the law of supply and demand. They just sell us millions of IOU’s at whatever the price is to avoid demand driving the price up(Infinite Liquidity) “GAMESTOPPED” Proof that the people and institutions that should need the least financial support, receive the most. 9,700,000,000$ margin requirement waived in exchange for waiving the PFOF rebate cost and PCO for us. They should all go out like Bernie Madoff for this. Stick to your guns fellow apes. I’m sure they thought that their tactics would have gotten rid of us by now, but we have remained united in our movement. Their mainstream media mouthpiece has been spouting fear, uncertainty, doubt and division for them for decades. The Apes have seen these puppets for what they are and an entire generation of people have learned that mainstream media is how the elite try to sell us their narrative. We’ve watched them blatantly try to mislead retail investors and the public in general. This is yet another threat to our democracy.(Freedom of Press) We need to make it crystal clear to them that we will not let this stand. We need to spread awareness of what they are doing. Like you, I want my tendies, but this is more than MOASS. We have an opportunity for financial freedom for ourselves and our families but we also have an opportunity
to stop the cycle of greed and corruption that caused the 2008 crash and recession and 14yrs later, here we are again. WE MUST INSIST ON TRUE CHANGE AND TRUE JUSTICE!!! THEY MAY RUN THIS COUNTRY, BUT WE’RE THE ONE’S THAT MAKE THIS COUNTRY RUN!!! WHAT HAPPENS IF 5 MILLION APES WALK OUT? WHAT HAPPENS IF 5 MILLION APES BECOME 10 MILLION? AND WHAT HAPPENS IF WE TELL THEM WE’RE NOT PAYING YOU TAXES UNTIL YOU STOP SELLING OUT THE AMERICAN PEOPLE AND DO YOU’RE FUCKING JOB!!! HAPPY INDEPENDENCE DAY APES, HERE’S TO OUR COMING FINANCIAL INDEPENDENCE DAY!!!
Really great comment!! Billionaires control everything from the markets, media to politicians. They are so used to printing money for free at no risk (with help from regulators tasked with doing the the opposite) that they are bewildered that they could challenged by the unwashed masses. They continue as if we are nats. I can’t agree more this is the death of democracy, tho it’s probably been dead for years we just didn’t realize it until now.
Corruption is the death of democracy. It has become clear that our government no longer serves the purpose or people for which it was intended. What percentage of U.S. senators and congressmen are multi millionaires? We are ruled by the elite and they are beholden to the people who finance they’re campaigns and build their wealth. They divide us every which way they can to keep us distracted and infighting. We all must continue to stand together. Shout from the roof tops that they are selling out our democracy. They have a choice, financial revolution, or THE REVOLUTION!!!
They are doing the same thing to BBIG right now. How can Citadel and Susquehanna be allowed to process orders while shorting the stock. This is a clear conflict of interest and should be a crime if it’s not. The problem is that there is no oversight as the SEC is clearly allowing this to happen.
“Citadel, Morgan Stanley, and Wolverine are short on AMC to this day.”
Source?
Why was it allowed to Citadel, to buy a lot of shares, but not for me????
IT’S MY MONEY AND I WANT IT NOW!
Judge dismiss for not enough evidence of collusion so now retail investors have proof, 1 judge has to approve this case to reach settlement!! Retail investors should be rewarded for these damages, or this system (market and justice) is broken
KEN GRIFFIN LIED UNDER OATH = PRISON
What about KEN GRIFFIN LIED TO CONGRESS under oath. If I did that I would be in prison. To hell with the rich privileged sob . Revolution is coming and we want our money
Wall street is a rigged scam. Politicians get kickbacks for allowing the fame to be rigged afainst the retail investor. What the govt. (SEC) and hedge funds have done is treason and is a death penalty offense. Rigging wall street and fleecing retail investors foe decades and propping up a phoney and complicit SEC to pretend they are looking out for the retail investor. We buy and hold until we decimate the HFs. We are going to take it all..
Someone should be held accountable. What impact is this have on us who invested in order stocks of Robin hood? Like sundials and so on.
Consider the billion$ retail investors were robbed of. Trillions! The rules changed that exact moment to benefit the 1%. The government is corrupt, complicit, and just as accountable for the criminal activity against the majority. I hope retail traders can destroy the entire financial system in retaliation! Legally of course…
If tables were turned (and they are all the time) the retail investor doesn’t get a break if he makes a bad trade. Those who made the decisions to short certain stocks should have to pay just like anyone else. Otherwise it’s not a fair market. The huge hedge funds are already at a huge advantage having the fastest computers and connections to the stock market servers.
Kenny goes to jail, doesn’t pass GO nor collects mayo
Is anyone suing them??
No cell no sell
F*ck these guys…they lost money…I and millions others lost too and were in a tighter spot than they are. It’s not how I feel…its the reality. Return my original plus losses from missed opportunities since inception and MAYBE that will display something worth discussing. Until then, this is outright criminal!
No cell, no sell. Let it squeeze, we deserve at the least that much. GME TO THE MOOOOOOOOOOON!!!!!
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Can’t Stop 🛑 Won’t Stop 🛑 Game 🎮 Stop 🛑