Republicans And Democrats Voice Outrage At Robinhood Blocking GameStop Trades
Republicans and Democrats have both condemned Robinhood’s move to block GameStop trades amid a groundbreaking stock surge.
The US online trading app ‘restricted transactions for certain securities to position closing only’ yesterday, January 28, as Redditors and other small-time investors wanted a slice of the lucrative pie choking out hedge fund managers who’d shorted stock.
GameStop (GME) was the main point of contention after its shares took a nosedive with the temporary ban. Other stocks included AMC Theatres, Blackberry, Nokia, Koss, Naked Brand Group, Express and Bed, Bath and Beyond. The block has been heavily criticised by financiers, lawmakers and other officials all over the world, as well as attracting a lawsuit.
Democratic Congresswoman Alexandria Ocasio-Cortez said: ‘This is unacceptable. We now need to know more about [Robinhood’s] decision to block retail investors from purchasing stock while hedge funds are freely able to trade the stock as they see fit. As a member of the Financial Services Cmte, I’d support a hearing if necessary.’
She added: ‘Inquiries into freezes should not be limited solely to Robinhood. 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.’
Tesla CEO Elon Musk replied: ‘Absolutely.’ Texas Republican Ted Cruz also replied: ‘Fully agree.’
Michigan Democrat Rashida Tlaib tweeted: ‘This is beyond absurd. [The Financial Services Committee] need to have a hearing on Robinhood’s market manipulation. They’re blocking the ability to trade to protect Wall St. hedge funds, stealing millions of dollars from their users to protect people who’ve used the stock market as a casino for decades.’
North Dakota Republican Kelly Armstrong wrote: ‘[Robinhood] was designed for normal Americans to participate in the stock market. We don’t need to protect hedge funds at the expense of everyday citizens.’
Democratic Congresswoman Maxine Waters, chairwoman of the House Committee on Financial Services, has since announced a hearing on both short selling and online trading platforms.
In a statement, she said: ‘Private funds preying on the pension funds of hard working Americans must be stopped. Private funds engaging in predatory short selling to the detriment of other investors must be stopped. Private funds engaging in vulture strategies that hurt workers must be stopped.’
She added: ‘As a first step in reining in these abusive practices, I will convene a hearing to examine the recent activity around GameStop (GME) stock and other impacted stocks with a focus on short selling, online trading platforms, gamification and their systemic impact on our capital markets and retail investors.’
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