Robinhood shocked investors Thursday morning when it suddenly restricted purchases of GameStop, AMC Entertainment, BlackBerry and some other volatile stocks. The shares have aroused great interest from regular investors on the Reddit forum r / WallStreetBets and other online trading communities, which is driving stock prices to astronomical heights and worrying regulators and brokerage firms
Other trading platforms, including Interactive Brokers and E-Trade, similarly blocked their customers from buying GameStop and the other “meme shares” on Thursday. But Robinhood, because of its popularity, its name and its brand as a democratizing force in the world of high finance, attracted the attention of customers and government officials to close its customers in the midst of the trade rose.
GameStop shares fell on Thursday, dropping more than 60 percent at closing time. AMC shares followed suit and lost 56 percent of their value. AMC has not fully recovered but bounced back 55 percent on Friday morning.
In a blog post Thursday afternoon, Robinhood said the decision to restrict purchases was necessary to comply with financial rules, “including SEC net capital liabilities and clearing house deposits,” which could increase in times of significant volatility. “These requirements exist to protect investors and markets and we take our responsibility to follow them seriously, even through the measures we have taken today,” the company said.
But Robinhood’s explanation of the restrictions helped critics a little. In a livestream on Twitch Thursday night, reps questioned. Alexandria Ocasio-Cortez (DN.Y.) Robinhood’s features in an extensive discussion of the power dynamics between Wall Street and the public.
“We saw no one go to jail for it,” Ocasio-Cortez said of Wall Street during the mortgage crisis. “We saw virtually no one who was responsible in any serious way.” The appearance of a populist uprising with GameStop felt like the first time anyone was held accountable, she said.
Leaders from both parties in the House and the Senate who chair committees that oversee the financial sector have promised to hold hearings on volatile trade. Among the lines will be the financial role of free trading platforms such as Robinhood and the actions of hedge funds whose short selling is at the heart of market volatility.
GameStop’s rise on Friday clashed with the wider market. The S&P 500 fell 36 points or almost 1 percent during morning trading. The Dow Jones industrial average averaged more than 300 points, or 1 percent, while the Nasdaq lost 114 points, or nearly 0.9 percent.
On Thursday, new information from the work department signaled a flagging economic recovery, marked by nearly 10 million job losses and nearly 24 million adults struggling to provide for their families. Officials said the country’s economy shrank by 3.5 percent last year as the coronavirus brutalized businesses and households, a slowdown not seen since 1946, when the government reduced wartime spending.
In a statement Friday, the heads of the Securities and Exchange Commission said that the agency “will carefully review the actions taken by regulated entities that may disadvantage investors or otherwise unnecessarily hamper their ability to trade certain securities.” The SEC went on to say that “we will act to protect retail investors when facts show abuse or manipulative trading activity that is prohibited under federal securities laws.”
More Tags We LovePreschool near me age 3 Raiders tickets cost Criminal defense attorney phoenix Can You Sue A Drunk Driver With No Insurance Home equity loans definition Top 5 Car Insurance Companies In Usa California Car Insurance Rates By Zip Code Home Insurance Offers Home school programs in tennessee Car Insurance For 1 Day Uk