In the aftermath of the GameStop debacle two weeks ago, some angry Robinhood customers took their anger offline and showed up at the front door of the company’s headquarters on the San Francisco Peninsula.
Police in Menlo Park say they have responded to several incidents at the online brokerage firm Robinhood’s headquarters in the past two weeks and have received a total of ten reports. CNBC reports that groups of angry protesters, numbering as many as 15 at a time, protested outside the building on different days, and in one case, a man threw animal feces in front of the door of the office building.
The protests come after the company made national headlines for its role in helping retailers and investors raise the price of shares in the failed video game retailer GameStop, and subsequently the buying side of trading in a move seen as protecting powerful hedge funds. Customers also complained that they were locked out of accounts and that they could not reach Robinhood’s customer service.
“I have money in my Robinhood account that I need for living expenses,” said Rayz Rayl, a professional poker player and father of three Indiana children who drove 2,400 miles to protest. “My money is currently being held hostage by Robinhood, I can not get it out,” he told CNBC. (Not long after CNBC reached out to Robinhood for comment on Rayl’s case, he was contacted by customer service and would have apparently restored his access.)
Robinhood is a popular start-up that is considered democratizing investments for smaller investors, but many of those who were most active in it and who took part in the ‘short press’ on GameStop two weeks ago have now soured the company. . . As CNBC reported on January 28, Robinhood abruptly halted the ability of clients to trade in certain stocks that were barely shorted so that they could only sell their positions and not buy new shares.
“We continuously monitor the markets and make changes where necessary. In light of the recent volatility, we limit transactions for certain securities only to the closing of positions, including $ AAL, $ AMC, $ BB, $ BBBY, $ CTRM “$ EXPR, $ GME, $ KOSS, $ NAKD, $ NOK, $ SNDL, $ TR and $ TRVG. We have also increased margin requirements for certain securities,” the company said in a statement.
Rayl said he lost $ 50,000 on Nokia shares, which was another company that traders on Reddit and elsewhere saw as one of the major investment firms shorting the shares.
Investment experts have been warning all week about the meteoric rise in the share price of GameStop – which at one point traded around $ 500, after shares were only worth $ 40 just a few weeks earlier – that although large hedge funds will suffer significant losses, the most small investors will probably suffer the most. This would be especially true for anyone who jumped on the bandwagon late and did not drop off their shares before the price inevitably dropped.
Shares in GameStop fell 44% on January 28, the same day that Robinhood limited customers’ selling ability.
The move by Robinhood is seen by left- and right-wing politicians as harmful and unfair to consumers – especially Senator Ted Cruz tweeted his agreement with a statement on Alexandria Ocasio-Cortez’s representation on Robinhood.
However, the beginning maintains that all users sign an agreement in which the company maintains the right to restrict trading in securities. Legal experts agree that brokerage firms have this wide discretion, and that recent lawsuits against Robinhood by angry traders are unlikely to apply.
Robinhood last made national headlines in November 2019 when Redditors – from the same WallStreetBets subreddit that launched the GameStop frenzy – discovered a loophole in Robinhood software that enabled them to trade ‘infinite leverage’, which in some cases made huge gains and losses for these small investors. One trader claims to be taking a $ 1,000,000 position in a company with only a $ 4,000 deposit. Robinhood closed the loophole days later.
Top image: A chalk drawing with reference to Vladimir Tenev, the co-founder of the Robinhood trading app, will be visible on February 1, 2021 in Menlo Park, California, on the sidewalk in front of the company’s headquarters. Robinhood announced on Monday that it had raised $ 3.4 billion last week amid a trade frenzy. (Photo by Justin Sullivan / Getty Images)