THE NEUTRAL ZONE
In the wake of Reddit group Wallstreetbets‘ role in sending stocks such as GameStop and AMC soaring, investing apps Robinhood and TD Ameritrade have placed restrictions on those stocks and others, citing concerns of volatility in the market.
“We made these decisions out of an abundance of caution amid unprecedented market conditions and other factors,” stated TD Ameritrade spokeswoman Alyson Nikulicz.
The restrictions placed on stocks like AMC and GameStop by TD Ameritrade and Robinhood have sparked a furious reaction from traders and politicians alike. Rep. Alexandria Ocasio-Cortez (D-N.Y.) tweeted, “This is unacceptable. We now need to know more about @RobinhoodApp’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.” Senator Ted Cruz (R-Texas) echoed that sentiment, retweeting the congresswoman and adding “Fully agree.”
Robinhood released a statement, noting that they “are committed to helping our customers navigate this uncertainty. We fundamentally believe that everyone should have access to financial markets.”
The Senate plans to hold a hearing to respond to “the current state of the stock market” following the volatility that has shaken the markets all week. Senate Banking Committee Chair Sherrod Brown (D-Ohio) announced the plan Thursday, stating, “People on Wall Street only care about the rules when they’re the ones getting hurt. American workers have known for years the Wall Street system is broken – they’ve been paying the price.” He added that the economy “must work for everyone not just Wall Street.”
This section includes an aggregation of articles showing different viewpoints on the topic.
Robinhood blocks purchases of GameStop, AMC, and others after days of Reddit-fueled rallies – Business Insider – 1/28/2021
The stocks that were removed have all surged in recent sessions as day traders united in Reddit forums like r/wallstreetbets and frenetically bought 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.
How trading apps are responding to the GameStop fustercluck – TechCrunch – 1/28/2021
A spokesperson for M1 Finance, a Midwest-based consumer fintech player that offers a basket of banking and investing services — more on its growth here and here — told TechCrunch via email that it wasn’t taking “specific” steps regarding individual stocks. But the company also provided a statement from its CEO, Brian Barnes. In his comment, Barnes drew a delineation between investing, and trading, which he likened to a casino, adding that his firm “question[s] whether short-term trading is predictable, sustainable or repeatable.”
Robinhood faces backlash from both parties for limiting trades – The Hill – 1/28/2021
A Financial Services Committee spokesperson did not immediately respond to The Hill’s request for comment on whether Chairwoman Maxine Waters (D-Calif.) plans to hold a hearing on the issue. Following rapid surges Wednesday, GameStop’s stock collapsed by 62 percent before 11:30 a.m. on Thursday, triggering multiple trading freezes. AMC Entertainment was down 67 percent, BlackBerry was down 44 percent and Nokia was down 30 percent.
AOC and others call for investigation into Robinhood’s GameStop freeze – The Verge – 1/28/2021
Other progressive Democrats have also made statements on the GameStop shorts, calling for further regulation of the financial industry. “It’s long past time for the SEC and other financial regulators to wake up and do their jobs — and with a new administration and Democrats running Congress, I intend to make sure they do,” Sen. Elizabeth Warren (D-MA) said in a statement Wednesday.
Robinhood Is Right to Save Day Traders From Themselves – Bloomberg – 1/28/2021
Nobody wants to see whatever’s happening in stocks like GameStop and AMC Entertainment Holdings Inc. to get to that point. Because if history is any guide, blame will be assigned, and the people to blame will not be whoever bought those stocks at high prices, but the companies and media who facilitated those purchases.
Class-action lawsuit filed against Robinhood for restricting trading – The Hill – 1/28/2021
The suit, filed in the Southern District of New York, claims that the day-trading app “purposefully, willfully, and knowingly removing the stock ‘GME’ [GameStop] from its trading platform in the midst of an unprecedented stock rise thereby deprived retail investors of the ability to invest in the open-market and manipulating the open-market.” Under the limits announced by Robinhood, users will be allowed to close out existing trades but won’t be able to acquire new shares of stocks in companies including GameStop, AMC and BlackBerry.
This section includes an aggregation of tweets showing different viewpoints on the topic.