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.
Inquiries into freezes should not be limited solely to Robinhood.— Alexandria Ocasio-Cortez (@AOC) January 28, 2021
This is a serious matter. Committee investigators should examine any retail services freezing stock purchases in the course of potential investigations - especially those allowing sales, but freezing purchases.
Enemies make strange bedfellows. Lock em up https://t.co/xNpccPw5Jj— Dave Portnoy (@stoolpresidente) January 28, 2021
Janet Yellen needs to be brought in front of Congress, TODAY.— Will Chamberlain (@willchamberlain) January 28, 2021
So @RobinhoodApp is saying they are protecting their users from over leveraging and getting burned. But somehow it’s okay when hedgefunds literally do the same exact thing. Nobody had a problem then until the hedge funds lost. Now speculating is a huge issue. #frauds— Dave Portnoy (@stoolpresidente) January 28, 2021
It took less than a day for big tech, big government and the corporate media to spring into action and begin colluding to protect their hedge fund buddies on Wall Street. This is what a rigged system looks like, folks! #RobinHood #RedditArmy #GME #GMEtothemoon https://t.co/UhrwGHCjng— Donald Trump Jr. (@DonaldJTrumpJr) January 28, 2021
What’s happening right now with Wall Street and tech platforms bailing out their hedge fund bros is ethically no different than if a casino boss came over to a blackjack table and the switched the players cards in full view of everyone— Buck Sexton (@BuckSexton) January 28, 2021
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.