Several retail stockbrokers, including Robinhood, said they would allow trades GameStop and other volatile companies after restricting customers’ ability to purchase securities earlier in the day.
“Starting tomorrow, we plan to allow limited buys of these securities,” Robinhood, a popular trading app, said. “We’ll continue to monitor the situation and may make adjustments as needed.”
Robinhood, which has attracted millions of millennials to trade on its platform by eliminating trading fees and making stock trading easy, had said Thursday morning that it would limit buying of the kinds of securities that have sparked an enormous rally in shares of GameStop, the video game retailer at the heart of the frenzy, and AMC Entertainment Holdings, the movie theater chain, and a number of other companies. The decision quickly drew fire.
Representative Alexandria Ocasio-Cortez, the progressive icon who represents parts of New York, called Robinhood’s move “unacceptable.”
“We now need to know more about Robinhood’s decision to block retail investors from purchasing stock while hedge funds are freely able to trade the stock as they see fit,” she wrote on Twitter. “As a member of the Financial Services Committee, I’d support a hearing if necessary.”
Senator Ted Cruz, the Texas Republican who often is a foil of Ms. Ocasio-Cortez and who helped lead the push against certification of the presidential election results, replied: “Fully agree.”
Customers flooded Google’s Play Store with angry, one-star reviews about the restrictions, tanking its average rating to 1 star out of 5.
“Manipulating the market in favour of Wall St. Completely undemocratic, the exact opposite of their motto,” wrote one reviewer. “Well, steal from the rich and give to the poor, unless you try to take from the rich directly, in which case the app won’t work anymore. Enjoy your hypocrisy,” wrote another user.
In its update on Thursday afternoon, Robinhood defended itself against accusations of favoring big traders, saying it had made the decision to limit trades because of “financial requirements, including SEC net capital obligations and clearinghouse deposits.”
“To be clear, this was a risk-management decision, and was not made on the direction of the market makers we route to,” the company said.