AOC demands probe after Robinhood app banned GameStop purchases triggering 90-minute sell-off frenzy
The app banned users from purchasing the stock, prompting a mass sell-off. The stock has since rebounded.
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Your support makes all the difference.Rep. Alexandria Ocasio-Cortez said she would support a hearing examining stock trading app Robinhood's decision to block lay investors from using the app to purchase GameStop shares and shares of other companies that were promoted on the Reddit message board WallStreetBets.
"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," Ms Ocasio-Cortez said. "As a member of the Financial Services Cmte, I’d support a hearing if necessary."
Shortly after Robinhood banned the purchase of the stock, numerous holders sold off their shares, dropping its price from the mid $300's to $196 per share. However, calls from the Redditors to "hold the line" kept the stock from plunging further, and by noon GameStop was already recovering as its price climbed back into the $220 range.
The stock became a battlefield between Reddit investors and hedge fund managers earlier in the week. The collective group of Redditors from the WallStreetBets subreddit bought the stock as hedge fund managers were attempting to short sell it.
Ms Ocasio-Cortez did not just limit her to call to Robinhood. She said any retail stock service allowing sales but halting purchases should be investigated.
Inquiries into freezes should not be limited solely to Robinhood.
"This is a serious matter. Committee investigators should examine any retail services freezing stock purchases in the course of potential investigations - especially those allowing sales, but freezing purchases," she said.
Rep. Ro Khanna supported her call for an investigation.
"Yes @aoc. We need an investigation into RobinhoodApp’s decision and who influenced that. And this shows the need for a financial transaction tax on hedge fund shorting and SEC regulations on short selling practices," he said.
Even conservative voices, like Donald Trump Jr and Barstool Sports owner Dave Portnoy jumped in to decry the app's move.
"Enemies make strange bedfellows. Lock em up," Mr Portnoy wrote, quoting Ms Ocasio-Cortez's call for an investigation. He later said he would "burn Robinhood to the ground" if they stopped free trading.
Mr Trump Jr criticised the government, tech companies and the corporate media for circling their wagons around the hedge funds.
"It took less than a day for big tech, big government and the corporate media to spring into action and begin colluding to protect their hedge fund buddies on Wall Street," he said. This is what a rigged system looks like, folks!"
Even Sen. Ted Cruz said he "fully" agreed with Ms Ocasio-Cortez, despite the fact that she has called for his resignation multiple times over his role in the attack at the US Capitol on 6 January.
Mr Cruz led the Senate's objection to the counting of the 2020 electoral votes and was captured on video whipping crowds of MAGA supporters into a frenzy the day before the Capitol insurrection.
A class action lawsuit against Robinhood has already been filed in the southern district of New York.
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