Several retail brokers, including Robinhood, said they would allow trading with GameStop and other volatile companies after restricting customers’ ability to buy stocks earlier in the day.
“Starting tomorrow, we plan to allow limited purchases of these securities,” said Robinhood, a popular trading app. “We will continue to monitor the situation and make adjustments if necessary.”
Robinhood, which has attracted millions of millennials to trade on its platform by eliminating trading fees and making stock trading easier, announced on Thursday morning that it would restrict purchases of securities that sparked a huge rally in shares of GameStop, the video Game retailer at the heart of the frenzy and AMC Entertainment Holdings, the cinema chain, and a number of other companies. The decision quickly drew fire.
Representative Alexandria Ocasio-Cortez, The New York Democrat called Robinhood’s move “unacceptable”.
“We need to know more now about Robinhood’s decision to prevent retail investors from buying stocks while hedge funds are free to trade stocks at their discretion,” she wrote on Twitter. “As a member of the Financial Services Committee, I would support a hearing if necessary.”
Senator Ted Cruz, the Texas Republican who is often a slide of Ms. Ocasio-Cortez and led the push against certification of presidential election results, replied, “I totally agree.”
Customers flooded Google’s Play Store with disgruntled one-star reviews of the restrictions, raising the average rating to 1 out of 5 stars.
“Manipulating the market in favor of Wall Street Completely undemocratic, the exact opposite of their motto,” wrote one reviewer. “Well, steal from the rich and give to the poor unless you are trying to take directly from the rich. In this case the app will no longer work. Enjoy your hypocrisy, ”wrote another user.
In its Thursday afternoon update, Robinhood defended itself against allegations of favoring large traders, stating that it had decided to restrict trading due to “financial requirements, including SEC net capital commitments and clearinghouse deposits.”
“To be clear, this was a risk management decision and was not made on the direction of the market makers we are going to,” the company said.
Webull, another trading app, said customers could only clear positions they held on GameStop, AMC and Koss, a headphone maker, before lifting restrictions that afternoon.