Rep. Alexandria Ocasio-Cortez (D-NY) is calling for an investigation into Robinhood, an app used by retail traders to buy stocks. The call for the investigation comes after Robinhood stopped its users from buying GameStop and other Reddit YOLO stocks on Thursday.
“This is unacceptable,” Ocasio-Cortez said in her tweet. “We 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. As a member of the Financial Services Committee, I’d support a hearing if necessary. Inquiries into freezes should not be limited solely to Robinhood. This is a serious matter. Committee investigators should examine any retail services stock purchase in the course of potential investigations—especially those allowing sales but freezing purchases.”
Retail traders congregating on Reddit had used Robinhood and other apps to melt up the price of GameStop, AMC, BlackBerry, and other stocks over the last two weeks. This morning, Robinhood froze users' ability to purchase more stocks, but allowed them to sell. According to Robinhood, 56 percent of its users owned stock in GameStop. Now they can’t purchase more.
Senator Ted Cruz (R-TX) retweeted Ocasio-Cortez’s call to investigate Robinhood. “Fully agree,” he said in his tweet.
Ocasio-Cortez responded soon after:
Rep. Rashida Tlaib (D-MI) also publicly called on the Financial Services Committee to launch an investigation. “They're blocking the ability to trade to protect Wall St. hedge funds, stealing millions of dollars from their users to protect people who've used the stock market as a casino for decades,” she said in a tweet.
Speaker of the House Nancy Pelosi also said she’s watching the GameStop situation and “we’ll all be reviewing it.”
Robinhood’s blog post announcing the throttle of buying stock claimed it wanted to help its customers navigate the uncertainty of the market. That’s true, but Robinhood’s customers were never the retail traders using its app. The app users are Robinhood’s product, that’s why the app lets retail traders buy and sell without taking a commission. Big financial institutions, like the hedge funds getting squeezed this week, purchase order flows from Robinhood. By shutting down sales of GME and other stocks, Robinhood is protecting its real customers—Wall Street movers and shakers.
Ted Cruz and Ocasio-Cortez did not immediately respond to our requests for comment.