Restricting trading has reduced the cash or margin cushion it had to hold at its clearing house. The company eased some of those restrictions on Friday and cut the number of companies with trade restrictions from 50 to eight on Monday.
Robinhood’s trade restrictions sparked an angry outcry among small investors, claiming that the very app that democratized trading is now placing Wall Street’s bid.
And the news that Robinhood raised $ 2.4 billion to ease trade restrictions didn’t impress North Carolina’s William Moyer. “It’s only you trying to cover your bum,” he said. “They realized last week that they screwed up badly and now they are trying to make it up to them by saying they have the money to do all of these trades now.”
Mr Moyer, a 26-year-old automotive service advisor who had bought shares in GameStop, Nokia, AMC and BlackBerry for the past two weeks, said he was offended by Robinhood’s decision to restrict trading on the platform. “I suffered with my family in 2008,” he said, referring to the 2008 financial crisis. “I think this is just another way the big banks show that they control everything we do,” he said. “They are just trying to keep us from actually increasing our wealth as individuals.”
Robinhood’s decision to restrict trading in stocks also drew the attention of lawmakers from across the political spectrum. Representative Alexandria Ocasio-Cortez, Democrat of New York, called it “unacceptable”. Senator Ted Cruz, Republican from Texas, retweeted it approvingly.
Legislators are awaiting hearings to examine Robinhood’s role in January’s market volatility.
“I want to make sure we understand what happened there,” said Senator Pat Toomey of Pennsylvania, the new Republican on the Senate Banking Committee, during an appearance on CNBC Monday morning of the decision to restrict trade.
Representative Maxine Waters, the California Democrat who chairs the House Financial Services Committee, said last week that she would hold a hearing on short selling as well as “online trading platforms” and “gamification”. On Monday, the committee announced that it would hold a hearing on February 18 on GameStop.