Democratic Reps. Alexandria Ocasio-Cortez and Rashida Tlaib on Thursday called on Congress to investigate Robinhood after the trading app—which helped amateur investors on Reddit boost the value of GameStop's stock in what progressives described as a lesson in the "absurdity" of capitalism—stopped allowing users to purchase stock in the video game retailer and other hot picks.
"This is unacceptable," said Ocasio-Cortez (D-N.Y.), a member of the House Financial Services Committee.
"We now need to know more about Robinhood's decision to block retail investors from purchasing stock while hedge funds are freely able to trade the stock as they see fit," Ocasio-Cortez noted, adding that she would support a hearing if necessary.
As Jordan Pearson reported for Vice:
According to screenshots shared on social media, on Thursday morning a notification appeared on Robinhood telling users that they could close their position on GameStop's stock but not buy any additional shares. Redditors are currently panicking, looking for ways to transfer their shares of GameStop off of Robinhood to other platforms, and are generally furious at the platform.
In a blog post, Robinhood confirmed that it has placed restrictions on several stocks due to volatility. "We continuously monitor the markets and make changes where necessary. In light of recent volatility, we are restricting transactions for certain securities to position closing only, including $AMC, $BB, $BBBY, $EXPR, $GME, $KOSS, $NAKD and $NOK. We also raised margin requirements for certain securities," the blog post read...
This is likely to have a massive impact on Robinhood users and ultimately the company. Holders are now unable to freely trade it; the app is only allowing users to close out their positions, meaning they can sell it but not buy more. This is potentially devastating for novice investors or those who simply want to follow the general marching orders of the r/WallStreetBets subreddit, which is to hold (and buy more) GameStop stock until further notice.
Tlaib (D-Mich.) called Robinhood's actions "absurd," and echoed her colleague's demand for "a hearing on Robinhood's market manipulation."
"They're blocking the ability to trade to protect Wall St. hedge funds," Tlaib said, "stealing millions of dollars from their users to protect people who've used the stock market as a casino for decades."
Many commentators have decried the double-standards that allow Wall Street firms to manipulate markets to maximize profit but punish Redditors for doing the same.
"If Redditors rallying GameStop is unacceptable market manipulation," tweeted former labor secretary Robert Reich, "what would you call it when greedy Wall Street bankers gambled away our entire economy in 2008 and faced no consequences?"
Rep. Ilhan Omar (D-Minn.) added to the chorus, pointing out that "the moment regular folks beat [Wall Street] at their own rigged game, it's SHUT IT DOWN." Instead, Omar suggested, Congress should impose a financial transaction tax to redistribute the wealth appropriated through speculative trading.
Ocasio-Cortez said she'll be on Twitch at 8:30 pm ET "to discuss today's developments with GameStop."