In the wake of the GameStop disaster two weeks ago, some angry Robinhood customers took their anger out of the air and appeared at the front door of the company’s San Francisco Peninsula headquarters.
Menlo Park police said they responded to several incidents in the past two weeks at the headquarters of online brokerage Robinhood and received a total of ten reports. CNBC reports that groups of angry protesters, up to 15 at a time, protested outside the building on different days and, in one case, a man threw animal feces at the door of the office building.
The protests come after the company made national headlines for its role in helping small traders and investors raise the stock price at the failed video game retailer GameStop, and after that limited the buying side of the negotiations in a move that was seen as a protection for powerful hedge funds. Customers also complained about having their accounts blocked and unable to contact Robinhood customer service.
“I have money in my Robinhood account that I need to pay my expenses,” said Rayz Rayl, a professional poker player and father of three children from Indiana who drove 2,400 miles to protest. “My money is currently held hostage by Robinhood, I can’t get it out,” he told CNBC. (Not long after CNBC contacted Robinhood to comment on Rayl’s case, he was contacted by customer service and reportedly restored his access.)
Robinhood is a popular startup that has been seen as democratizing investment for small investors, but many of those who were most active in it and who participated in helping the “little squeeze” on GameStop two weeks ago now soured the company. As reported by CNBC on January 28, Robinhood abruptly disrupted customers’ ability to trade certain stocks that were being heavily shorted, allowing them to only sell their positions and not buy new shares.
“We continuously monitor markets and make changes where necessary. In light of recent volatility, we are restricting transactions in certain securities only to close positions, including $ AAL, $ AMC, $ BB, $ BBBY, $ CTRM, $ EXPR, $ GME, $ KOSS, $ NAKD, $ NOK, $ SNDL, $ TR and $ TRVG. We have also increased margin requirements for certain securities, “the company said in a statement.
Rayl said he lost $ 50,000 with the shares of Nokia, another company that traders released on Reddit and elsewhere as a company whose shares were being shorted by major investment firms.
Investment experts warned throughout the week of the meteoric rise in GameStop’s stock price – it was trading around $ 500 at one point, after shares worth only $ 40 weeks earlier – that, although large hedge funds may be taking a bath with their significant losses, those who would most likely suffer would be the small investors themselves. This would be especially true for anyone who joined the movement late and did not give up their actions before the price inevitably fell.
GameStop’s shares fell 44% on January 28, the same day that Robinhood limited customers’ ability to sell.
Robinhood’s move was seen by left and right politicians as harmful and unfair to consumers – notably Senator Ted Cruz tweeted his deal with a statement on Robinhood by MP Alexandria Ocasio-Cortez.
But the startup says that all users sign an agreement in which the company maintains the right to limit trading in any securities at its discretion. Legal experts agree that brokers have this broad discretion, and recent lawsuits against Robinhood by angry brokers are unlikely to prevail.
Robinhood last made national headlines in November 2019, when Redditors – from the same WallStreetBets subreddit that launched the GameStop frenzy – discovered a gap in the Robinhood software that allowed them to trade with “infinite leverage”, which in some cases it allowed huge gains and losses for these small investors. One trader stated that he took a $ 1,000,000 position in a company with only a $ 4,000 deposit. Robinhood closed the breach days later.
Top image: A chalk drawing referencing Vladimir Tenev, the co-founder of the commercial application Robinhood, can be seen on the sidewalk in front of the company’s headquarters on February 1, 2021 in Menlo Park, California. Robinhood announced on Monday that it raised $ 3.4 billion amid a frenzy of negotiations last week. (Photo by Justin Sullivan / Getty Images)