The backlash against Robinhood is heading to court.
On Thursday morning, the popular online brokerage app took steps to restrict the trading of GameStop, AMC, and other “meme stocks” after a group of Reddit users banded together to drive up stock prices of certain companies to troll traditional hedge funds that get rich off shorting stocks
BREAKING: Robinhood has restricted users from buying GameStop, AMC, BlackBerry, Nokia stock. This is VERY CRAZY, I do not see how RobinHood survives screwing its users like thishttps://t.co/mUujOjoUu8
— Jason Koebler (@jason_koebler) January 28, 2021
Statement from Robinhood
— Robinhood (@RobinhoodApp) January 28, 2021
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.”
Outraged politicians and everyday Robinhood users immediately blasted the app over the decision to restrict trading on meme stocks.
This is unacceptable.
We now need to know more about @RobinhoodApp’s decision to block retail investors from purchasing stock while hedge funds are freely able to trade the stock as they see fit.
As a member of the Financial Services Cmte, I’d support a hearing if necessary. https://t.co/4Qyrolgzyt
— Alexandria Ocasio-Cortez (@AOC) January 28, 2021
Individual investors are being stripped of their ability to trade on @RobinhoodApp
Meanwhile hedge funds and institutional investors can continue to trade as normal.
What do you call a market that removes retail investors ability to buy to save institutional investors shorts? https://t.co/G0hQFJDaG4
— wsb mod (@wsbmod) January 28, 2021
Just hours after Robinhood announced they were restricting trades on their app, someone filed a class-action complaint against the company in New York.
— Lydia Moynihan (@LJMoynihan) January 28, 2021
New: A class action complaint against Robinhood has been filed, claiming it "deprived retail investors of the ability to invest in the open-market and manipulating the open-market." https://t.co/dd41ArNVWg
— philip lewis (@Phil_Lewis_) January 28, 2021
Considering the intense backlash from everyday users who joined the app in recent days due to the GameStop story, it’s baffling that Robinhood hasn’t reversed course or apologized for going against their own ethos of “democratizing finance for all.”