Robinhood, on Thursday, has restricted the trading of highly volatile stocks like GameStop and AMC on its platform. This move has happened before the markets opened on Thursday.
The clients were informed that they could close out positions in the affected stocks, but will be unable to purchase additional shares. The companies which are affected by this move are GameStop, AMC, BlackBerry, BedBath & Beyond, Express, Koss, Naked Brand and Nokia.
It was stated in a press release by the company that, they constantly monitor the markets and make changes where necessary.
Decision by Robinhood criticized by Media.
This move by Robinhood has attracted the attention of many lawmakers. Rep. Rashida Tlaib posted on twitter that this decision was beyond absurd. She also commented that FSCD need to have a hearing on Robinhood’s market manipulation.
This is beyond absurd. @FSCDems 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. https://t.co/CGkJxVfzkv
— Rashida Tlaib (@RashidaTlaib) January 28, 2021
According to the reports by Motherboard, around 56% of Robinhood users own GameStop stock. The announcement by Robinhood came when, GameStop stock was trading for $483.
This decision by Robinhood has plenty of backlashes from the social media. This was also noticed by US representative Alexandria Ocasio-Cortez, who tweeted that this move is unacceptable. He continued to say that, as a member of US House Committee on Financial Services, he would support a hearing if necessary. He also added that, the inquiries should not be only for Robinhood.
Robinhood gives explanation.
As a reply to this, Robinhood has stated that it would allow, limited purchasing of GameStop and other company shares. Robinhood has made it clear that amid this week’s peculiar circumstances in the market , they have made a decision to temporarily limit buying certain securities. As a brokerage firm, they have a number of financial requirements. Some of these requirements may fluctuate based on the volatility in the market.
This move is required to protect investors and markets, and Robinhood assures that they take the responsibility to comply seriously with them.
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