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Video game retailer GameStop’s stock price continued to skyrocket Friday after the investment app Robinhood allows users to buy shares following the reaction to previous purchase restrictions. Lawmakers have become aware of these restrictions and are calling for Congressional action on the company.
Rep. Alexandria Ocasio-Cortez, a Democrat from New York; Rep. Rashida Tlaib, a Democrat from Michigan; and Sen. Ted Cruz, a Texas Republican, all agreed that there should be a hearing on Robinhood’s decision to restrict trading on GameStop, AMC and other actions. The investment service said in a blog post on Thursday that it would only allow the sale of shares in Blackberry, Express, Koss, Naked, Nokia, AMC and GameStop, due to recent market volatility. He reversed the course on Thursday after the markets closed and allowed users of the app to buy shares on Friday, although he is not allowing the purchase of fractional shares from the companies mentioned.
“This is unacceptable,” Ocasio-Cortez tweeted Thursday. “Now we need to know more about @RobinhoodApp’s decision to prevent retail investors from buying shares while hedge funds can freely trade the shares as they see fit. As a member of Financial Services Cmte, I would support an audience if necessary.”
Robinhood did not comment on the tweets of members of Congress.
Senator Sherrod Brown, an Ohio Democrat and new chairman of the Senate Banking, Housing and Urban Affairs Committee, tweeted Thursday he will hold a hearing on the current state of the stock market.
People on Wall Street only care about the rules when they are being harmed.
It’s time for the SEC and Congress to make the economy work for everyone.
As incoming president of the @SenateBanking Committee, I will hold a hearing on the current state of the stock market. https://t.co/V9Hzp26jRT
– Sherrod Brown (@SenSherrodBrown) January 28, 2021
“People on Wall Street only care about the rules when they are hurting themselves,” said Brown. “It’s time for the SEC and Congress to make the economy work for everyone.”
Rep. Paul Gosar, an Arizona Republican, sent a letter to the Justice Department on Thursday asking an immediate investigation into Robinhood and Citadel Securities, a high-frequency trading company that provides Robinhood with almost half of its revenue, according to a report by Bloomberg.
New York Attorney General Letitia James released a statement on Thursday, saying she is aware of concerns about Robinhood and is reviewing the matter.
NEW: NY AG Letitia James says she is looking into issues regarding Robinhood, the stock trading app that blocked the possibility of buying GameStop shares today. pic.twitter.com/iQiXCVanOR
– Jon Campbell (@JonCampbellGAN) January 28, 2021
On Friday, the United States Securities and Exchange Commission said that “closely analyze actions taken by regulated entities that may harm investors or unduly inhibit their ability to trade certain securities. “The agency also monitors the volatility of some stocks.
Robinhood is not the only company to place restrictions on GameStop stock trading. Webull tweeted Thursday that it would also prevent the purchase of shares in the video game retailer, as well as the AMC movie theater chain and headphone maker Koss. SoFi added an alert to its GameStop and AMC page saying that its clearing partner, Apex Clearing, will prevent the purchase of shares in the two companies. Both Webull and SoFi, like Robinhood, changed their decisions Thursday afternoon. TD Ameritrade said Wednesday he would restrict certain trades involving GameStop shares.
On Thursday, a class action lawsuit was filed in the Southern District of New York against Robinhood for restricting stock trading. The complaint says the company “deliberately, deliberately and knowingly removing ‘GME’ shares from its trading platform amid an unprecedented stock increase … deprived retail investors of the ability to invest in the open market”
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AOC analyzes Robinhood’s business practices
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