AOC and Conservatives Agree...Which Means Robinhood and Others Could Be In Trouble

Posted: Jan 28, 2021 1:15 PM
AOC and Conservatives Agree...Which Means Robinhood and Others Could Be In Trouble

Source: (AP Photo/Patrick Semansky)

As Leah and Matt have detailed, there is a populist revolt happening against Wall Street hedge funds. 

This morning stock trading applications Robinhood, Webull and others stopped the sale and trade of a number of stocks, including Gamestop, AMC, Nokia and more. They did so after a group of Reddit investors beat hedge fund Melvin Capital at its own game and by playing by their rules. 

Robinhood cited "market volatility" as the reason they stopped certain stock purchases and trades. People from all kinds of political backgrounds aren't buying it and are crying foul. Republican and Democrat lawmakers are paying close attention.

The app is also getting sued by customers. From Bloomberg

Robinhood Markets was hit by at least two customer lawsuits after restricting transactions on stocks including GameStop Inc. following a frenzied runup driven by Reddit-inspired traders.

Robinhood was named as a defendant in federal lawsuits filed in Manhattan and Chicago on Thursday.

In the New York suit, Robinhood user Brendon Nelson, of Massachusetts, said the company removed GameStop from its trading platform in the midst of an “unprecedented stock rise,” depriving individual investors of the ability to invest and manipulating the market. The decision was a breach of its customer agreement and was in violation of financial industry rules, according to the complaint.

In the Chicago suit, user Richard Joseph Gatz, of Naperville, Illinois, said the halt of trading in Blackberry, Nokia and AMC Theatres “was to protect institutional investment at the detriment of retail customers” and is in “lockstep” with other trading platforms.

There are also serious questions about the role newly minted Treasury Secretary Janet Yellen may have played in the halt of stock sales and trading, given her own profiting from the shorting of GameStop shares.