Robinhood announces ‘limited purchases’ on GameStop, AMC on Friday

GameStop went on a stock market adventure again on Thursday, crossing $ 450 a share before closing at $ 193.60. Behind the meteoric rise: Reddit users teaming up to tackle Wall Street venture.

The rebellion experienced a hiccup when individual investors invented some trading sites and programs restricted transactions in securities of the struggling retailer for video games, as well as the film chain AMC and other companies. Robinhood, a popular investor app, has prevented customers from buying more shares of various companies, but it allows ‘limited purchases’ from Friday.

On Thursday morning, Twitter users began posting screenshots of their Robinhood app that showed a message appended to the pages of GameStop, AMC, Nokia and Bed, Bath and Beyond: “This stock is not supported on Robinhood.”

Robinhood explained the move in a blog post before trading opened. “In light of recent volatility, we are restricting transactions for certain securities to position closing only, including $AMC, $BB, $BBBY, $EXPR, $GME, $KOSS, $NAKD and $NOK,” the company wrote.

The company later sent an email to customers saying it would allow “limited buys” of those securities starting on Friday. Robinhood made the decision because of US Securities and Exchanges Commission regulations. 

The @wsbmod Twitter account, which is tied to a Reddit community that’s been driving recent trades, said the freeze harmed small traders and favored the Wall Street establishment. “Individual investors are being stripped of their ability to trade on [the Robinhood app], “said the tweet.” Meanwhile, hedge funds and institutional investors may continue to trade as normal. “

A class action lawsuit was filed Thursday in the Southern District of New York.

Webull, another investment service, tweeted on Thursday that trading in shares of GameStop, AMC and headphone maker Koss has begun to limit. Webull calls the “extreme volatility” of the stocks restricting user transactions to closing positions. It later removed the company those restrictions.

U.S. Representative Rashida Tlaib, a Democrat from Michigan, called on the House Financial Services Committee to hold a hearing on the conduct of the trade service. She described Robinhood’s efforts as ‘market manipulation’.

On top of that, it’s going to be absurd. @FSCDems should have a trial on Robinhood’s market manipulation. They block the ability to trade to protect Wall St. hedge funds, and steal millions of dollars from their users to protect people who have been using the stock market as a casino for decades. https://t.co/CGkJxVfzkv

– Rashida Tlaib (@RashidaTlaib) 28 January 2021

Other members of Congress, including Rep. Alexandria Ocasio-Cortez and Senator Ted Cruz, agrees with the call for trial.

TD Ameritrade, another broker, said on Wednesday that it would place restrictions on trading stocks for GameStop, AMC and others. The brokerage firm confirmed the restrictions, saying it made the decisions out of an abundance of caution amid unprecedented market conditions and other factors.

“In the interest of reducing risk for our company and customers, we have imposed several restrictions on some transactions in $ GME [GameStop], $ AMC [AMC Theaters] and other securities, “said TD Ameritrade.

A spokesman for TD Ameritrade said the restrictions include increasing requirements needed to borrow money for shares known as a margin and to restrict transactions such as short selling.

Nasdaq CEO Adda Friedman told CNBC on Wednesday that the stock exchange would trade and investigate if he believed someone was manipulating the market. AMC is listed on Nasdaq, while GameStop is traded on the New York Stock Exchange.

William Galvin, secretary of the Massachusetts Commonwealth, told Barron’s the New York Stock Exchange should ‘just consider suspending [GameSpot] for a month. ”

The SEC is also monitoring the situation.

“We are aware of the ongoing market volatility in the options and stock markets and are actively monitoring it, in line with our mission to protect investors and maintain fair, orderly and efficient markets,” the SEC said in a statement. statement Wednesday. “We are working with our co-regulators to assess the situation and review the activities of regulated entities, financial intermediaries and other market participants.”

The White House is monitoring the situation, White House press secretary Jen Psaki said on Wednesday.

Correction, 28 January: An earlier version of this story incorrectly stated that TD Ameritrade had restricted new purchases of GameStop and AMC shares. It restricts certain trades, but users can still buy new shares from those companies.