Lawmakers from both major parties criticized Robinhood on Thursday after the California-based financial services firm announced it had restricted its customers‘ ability to buy stock in GameStop and other companies whose shares have been driven up by retail investors organized online.
Robinhood announced earlier in the day that it had limited trade in GameStop and other stocks targeted by investors on the irreverent WallStreetBets Reddit forum, citing „recent volatility.“
Investors from the message board had sent shares of the video game retailer up 1,500% in recent weeks, in the process pulling off a calamitous „squeeze“ for hedge funds who had bet the company’s shares would continue to slide. In a reversal, shares of GameStop tanked on Thursday after the restrictions were put in place.
Amid a clamor from lawmakers, the Democratic leaders of the House Financial Services Committee and the Senate Banking Committee said they would hold hearings.
One of the first barbs on Thursday came from Rep. Ro Khanna, D-Calif., a progressive who represents Silicon Valley, called for „more regulation and equality“ in financial markets in a statement about Robinhood’s move.
„While retail trading in some cases, like on Robinhood, blocked the purchasing of GameStop, hedge funds were still allowed to trade the stock,“ Khanna said.
„Instead of investing in future technologies to help America win the 21st Century, Wall Street poured billions into shorting this stock to crush this company and put workers out of business. The future of this country lies in that access and equality across every sector of our economy,“ Khanna said.
Rep. Rashida Tlaib, D-Mich., a member of the Financial Services Committee, went further, calling Robinhood’s move „beyond absurd“ and demanding 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,“ Tlaib said.
Rep. Alexandria Ocasio-Cortez, D-N.Y., who also sits on that committee, said she would support a hearing if necessary, condemning Robinhood’s move as „unacceptable.“
Rep. Maxine Waters, D-Calif., the chair of the Financial Services Committee, said later on Thursday that she would hold a hearing to examine GameStop „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.“
„We must deal with the hedge funds whose unethical conduct directly led to the recent market volatility and we must examine the market in general and how it has been manipulated by hedge funds and their financial partners to benefit themselves while others pay the price,“ Waters said.
Sen. Sherrod Brown, D-Ohio, the incoming chair of the Banking Committee, said Thursday that he will hold a hearing on the „current state of the stock market.“
„People on Wall Street only care about the rules when they’re the ones getting hurt,“ Brown said in a statement. „American workers have known for years the Wall Street system is broken – they’ve been paying the price. It’s time for the SEC and Congress to make the economy work for everyone not just Wall Street.“
Robinhood was not the only broker to limit sales of GameStop. Interactive Brokers on Wednesday said it had placed restrictions on sales of the stock. Charles Schwab said Thursday that its customers could still trade GameStop but noted that it limited certain kinds of transactions involving more risk.
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