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That explanation doesn't make much sense to me. The hedge funds and investment firms aren't clicking a sell button and getting told the next day by the trade desk they couldn't get shares. They had their positions. Retail isn't big enough to short 40% of the float. The short interest being 140% of the float is absolutely kooky. There's something going one here, and no one knows what yet but I don't think it's a timing issue.
Also, can we not pretend that professional traders don't commonly laugh and joke about "ripping people's faces off" etc. or that these gigantic short trades basically profit off a retailer going out of business and laying off 40,000 low paid workers? You don't think Melvin Capital wants that to happen? Think they care about that damage? Huge financial blowups are almost a badge of honor on Wall Street. It's part of the industry. Your gain is proportional to the other guy's loss - especially in futures markets. You do financial damage to the loser whether you think about it, or like it, or not but that money still spends, right?
Robinhood has every right to close positions secured by margin. They do not have to lend money to anyone if they don't want to. Isn't that what happened? If so the lawsuit is DOA. If it was a cash account then there's something to it I think...
I dont think it was just margin it was set to close only for all positions. Saw someone post they could not even search GME in the Robinhood app will try to find that.
I think that that was predominately the case. But then again, a fair contingent of RobinHood users have no idea what margin really is and how it relates to Reg-T. But I think the lawsuit is DOA (depending on judge) but may end up in a settlement without acknowledging any wrongdoing. Usually cheaper to settle.