Robinhood, a trading app that claims to 'democratize finance for all,' is facing intense backlash after removing a number of names from its platform Thursday before the market opened.
GameStop, Nokia, AMC Entertainment Holdings, Bed Bath & Beyond, BlackBerry, Koss Corp., and Naked Brand Group were restricted to “position closing only,” meaning traders could only sell their existing holdings, not buy additional shares.
The stocks that were removed have all surged in recent trading sessions as day-traders united in Reddit forums like WallStreetBets frenetically buy the names to push their share prices higher. The phenomenon has already fueled massive losses for numerous hedge funds and caught the attention of regulators and the White House. (Business Insider)
In a statement, the company said the changes were made due to "recent volatility" and that it was "committed to helping our customers."
We continuously monitor the markets and make changes where necessary. In light of recent volatility, we are restricting transactions for certain securities to position closing only, including $AMC, $BB, $BBBY, $EXPR, $GME, $KOSS, $NAKD and $NOK. We also raised margin requirements for certain securities.
We’re committed to helping our customers navigate this uncertainty. We fundamentally believe that everyone should have access to financial markets. We’re humbled to have helped many people invest in the markets for the first time. And we’re determined to provide new and experienced investors with the tools and resources to help them invest responsibly for their long-term financial futures. (Robinhood)
Dave Portnoy, founder of Barstool Sports, blasted Robinhood for being the “biggest frauds of them all” and said the company's executives should be in jail right now.
And it turns out @RobinhoodApp is the biggest frauds of them all. “Democratizing finance for all” except when we manipulate the market cause too many ordinary people are getting rich pic.twitter.com/Xcvs4CdEmr— Dave Portnoy (@stoolpresidente) January 28, 2021
Somebody is going to have to explain to me in what world @RobinhoodApp and others literally trying to force a crash by closing the open market is fair? They should all be in jail.— Dave Portnoy (@stoolpresidente) January 28, 2021
Either @RobinhoodApp allows free trading or it’s the end of Robinhood. Period.— Dave Portnoy (@stoolpresidente) January 28, 2021
You are scam artists. You are crooks. You deserve to be behind bars and you know it https://t.co/NlelsKhTnY— Dave Portnoy (@stoolpresidente) January 28, 2021
He argued the company "will never recover from this." Others were wondering how long it would take for a class action lawsuit to start.
Interactive Brokers and TD Ameritrade took similar action.
BREAKING: Robinhood, Interactive Brokers restrict trading in GameStop stock and options https://t.co/SQshaMWMuQ— CNBC Now (@CNBCnow) January 28, 2021
"In the interest of mitigating risk for our company and clients, we have put in place several restrictions on some transactions in $GME, $AMC and other securities,” a spokeswoman for TD Ameritrade told MarketWatch"https://t.co/RVg97BAN8H— wsb mod (@wsbmod) January 28, 2021