GameStop has taken a roller-coaster ride on the stock market this week thanks to a movement on Reddit. The spike in share price caused some investing services and apps, including Robinhood, to restrict the trading of GameStop stock. (Robinhood has since reversed course on that decision and will allow "limited buys" of shares starting Friday.) The restrictions caused a backlash among users, and now some members of Congress are taking notice.
Rep. Alexandria Ocasio-Cortez, a Democrat from New York; Rep. Rashida Tlaib, a Democrat from Michigan; and Sen. Ted Cruz, a Republican from Texas, all were in agreement that there should be a hearing on Robinhood's decision to restrict the trading of GameStop, AMC and other stocks. The investing service said in a blog post Thursday that it would allow only the selling of shares from Blackberry, Express, Koss, Naked, Nokia, AMC and GameStop, due to the recent market volatility.
"This is unacceptable," Ocasio-Cortez tweeted Thursday. "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."
Ocasio-Cortez is taking to Twitch on Thursday, at 8:30 p.m. ET/5:30 p.m. PT to talk more about Robinhood's actions.
Robinhood had no comment on the tweets from the members of Congress.
Sen. Sherrod Brown, a Democrat from Ohio and the incoming chairman of the Senate Committee on Banking, Housing, and Urban Affairs, tweeted Thursday that he'll hold a hearing about the current state of the stock market.
People on Wall Street only care about the rules when they're the ones getting hurt.
It's time for SEC and Congress to make the economy work for everyone.
As Incoming Chairman of the @SenateBanking Committee, I will be holding a hearing on the current state of the stock market. https://t.co/V9Hzp26jRT
— Sherrod Brown (@SenSherrodBrown) January 28, 2021
"People on Wall Street only care about the rules when they're the ones getting hurt," Brown said. "It's time for the SEC and Congress to make the economy work for everyone."
New York Attorney General Letitia James released a statement Thursday saying she is aware of the concerns regarding Robinhood and is reviewing the matter.
NEW: NY AG Letitia James says she is reviewing issues re: Robinhood, the stock-trading app that blocked the ability to buy GameStop shares today. pic.twitter.com/iQiXCVanOR
— Jon Campbell (@JonCampbellGAN) January 28, 2021
The maker of the popular investing app isn't the only company to put restrictions on trading GameStop stock. Webull tweeted Thursday that it would also prevent the buying of stocks from the video game retailer as well as from theater chain AMC and headphone manufacturer Koss. SoFi added a warning to its GameStop and AMC page saying that its clearing partner, Apex Clearing, will prevent purchases of shares from the two companies. Both Webull and SoFi, like Robinhood, have since reversed their decisions, Thursday afternoon. TD Ameritrade said Wednesday that it would restrict certain trades involving GameStop's stock.
On Thursday, a class-action lawsuit was filed in the Southern District of New York against Robinhood for restricting stock trades. The complaint says that the company "purposefully, willfully, and knowingly removing the stock 'GME' from its trading platform in the midst of an unprecedented stock rise ... deprived retail investors of the ability to invest in the open-market."
Watch this: AOC looks into Robinhood's business practices
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