An exterior view of a GameStop store on July 21, 2020 in Pembroke Pines, Florida. (Photo by Johnny Louis/Getty Images)
Robinhood is facing class action lawsuits after the company’s response to the surge in trading involving GameStop and AMC, according to Fox Business.
On Thursday, Robinhood and other trading platforms announced they would be restricting those stocks to “liquidate only.”
“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 $AAL, $AMC, $BB, $BBBY, $CTRM, $EXPR, $GME, $KOSS, $NAKD, $NOK, $SNDL, $TR, and $TRVG. We also raised margin requirements for certain securities.,” Robinhood said in a statement.
Reddit users on the forum “wallstreetbets” found a list of companies that were being heavily shorted, or bet against, by investment firms. That list included GameStop, AMC, Nokia and others.
ince then, they rallied amateurs to invest in those companies, driving the stock prices up and making it impossible for investment firms to profit from their bets.
RELATED: Investment firms back down after Reddit thread sends GameStop shares soaring
The stocks immediately found support from amateur investors, but after trading planforms restricted transactions, they are finding support from lawmakers.Rep. Alexandria Ocasio Cortez issued a stern rebuke of the online brokerage on Thursday, calling their decision to block retail investors from trading volatile stocks “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,” Ocasio Cortez tweeted. “As a member of the Financial Services Cmte, I’d support a hearing if necessary.”
Sen. Ted Cruz, a Texas Republican who often finds himself firmly in opposition to AOC, chimed in saying he fully agreed.
This story was reported from Atlanta.