I wonder if the USO lawsuits may apply to the margin calls on these chosen stocks. From another thread, a judge rules on USO going negative and a margin call. ph1l said: https://casetext.com/case/lindstrom-v-td-ameritrade-inc Some quotes from the judge... The problem for Lindstrom is that he fails to identify any duty that TDAFF owed to Lindstrom to inform him of market trends. Futures trading is risky, and TDAFF made Lindstrom aware of that before he could even sign up for an account. Moreover, contemporaneous newspaper articles referenced in TDAFF's Motion make clear that the possibility the oil prices could fall into the negatives was widely reported in the media. Lindstrom has cited no authority to suggest that an investment platform has an affirmative duty to make its users aware of publicly available information that may negatively affect their investments. Indeed, TDAFF has no fiduciary obligations to Lindstrom. The Futures Client Agreement, however, "authorizes [TDAFF], without prior notice and in its sole discretion, to liquidate any assets held by TD Ameritrade Clearing, Inc. in a Securities Account to eliminate [any] margin deficiency or insecurity." (Dkt. 17 at p. 37.) That is precisely what happened here; Lindstrom's account became under-margined as the futures prices continued to drop, so TDAFF exercised its discretion to liquidate. Lindstrom fails to identify any principle that would support imposing liability on TDAFF for exercising its right to liquidate securities held in under-margined accounts. Lindstrom has failed to state any of the elements of a securities fraud claim under 7 U.S.C § 9 and 17 C.F.R. § 180.1(a)(3). A good read...But close the door with no distractions.
A margin call at the discretion of the broker...Isn't it in the fine print?? Charles Schwab Corp. SCHW, +3.55% issued Friday a statement, to clarify actions it has taken related to the recent frenzied trading activity stocks, such as those of GameStop Corp. GME, -30.77%, AMC Entertainment Holdings Inc. AMC, +0.30% and Express Inc. EXPR, -16.67%, that have resulted from so-called "short squeezes." The discount broker said that given the "confusion" about what it and its recently acquired TD Ameritrade have done in response to the recent trading activity, Schwab said: "Neither Charles Schwab & Co. nor TD Ameritrade halted buying or selling of ANY stocks this week. Neither firm restricted buying or selling basic options. Both firms did adjust margin requirements on select stocks to ensure clients had sufficient assets to pay for stock purchases. Both firms also restricted certain advanced options strategies." For example, Schwab said it began on Jan. 13 the process of changing the margin requirement for GameStop's stock to 100%, which means Schwab's clients were restricted from using GameStop shares as collateral for a margin loan. Schwab's stock dropped 4.9% in morning trading Friday. It has lost 3.6% year to date, while the S&P 500 SPX, +1.61% has edged up 0.2%.
Yup. They're not stoopid. Many of the WSB/ettors were making a go big or go home play maxing out/pyramiding an all or nothing trade of a lifetime. Guess I maxed the superlatives in that sentence. Anyway like other posts have already mentioned, read the fine print whiners.
I guess sneakerkid23 should sue the US Government for making the big-bad holiday wolf called "President's Day" that kept the markets closed, so his little piggy trade orders could not go through. Hummm....
Payments for order flow almost tripled in 2020 at Robinhood, other brokerages https://finance.yahoo.com/news/payments-for-order-flow-exploded-in-2020-215034948.html The GameStop (GME) story has fueled interest in the once-arcane process known as payments for order flow, an industry practice that exploded in 2020 amid the retail investor frenzy over the stock market. Data from Alphacution shows that revenues from payments for order flow almost tripled at the four major brokerages — TD Ameritrade, Robinhood, E*Trade (MS), Charles Schwab (SCHW) — to $2.5 billion in 2020 from $892 million in 2019. Other brokerages, including Webull, Ally Invest, and Interactive Brokers accounted for another almost $300 million in payments. .................... The profit-sharing of this scheme is built into the bid-ask spread. In a trade, a client gives the brokerage firm an ask price, or how much they’re willing to pay for a security. The price that the wholesaler is able to locate and execute on is called the bid spread. If the wholesaler is able to purchase the stock at a lower price than the client asked for, the bid-ask spread serves as a bounty split by the brokerage and the wholesaler. A wholesaler pockets some of that spread for its work in finding the better price, and the remainder is paid out to the brokerage for passing along the order to the wholesaler in the first place (hence, “payments for order flow”). The brokerage can do a few things with this payment: It can pass along some of the savings to the investor (reflected as purchasing the stock at below ask price), or it can pocket the savings within the company. ................. more at link