Trading app Robinhood has enraged its users and triggered accusations of “flagrant” manipulation after it banned the buying of GameStop, AMC, Blackberry and Nokia stock, the trading of which put the squeeze on Wall Street.
Robinhood users found themselves unable to purchase stock in $GME, $AMC, $BB and $NOK (GameStop, AMC Theaters, Blackberry and Nokia) on Thursday morning, after an influx of amateur traders drove their share prices to dizzying heights in recent days, inflicting multi-billion dollar losses on Wall Street hedge funds who bet on the companies’ demise.
The app cited “market volatility” as the reason for the shutdown, which came after Wall Street insiders demanded something be done about the amateur traders’ “manipulation” of GameStop stock. Amid the frenzy and calls for regulation, the White House said it was monitoring the situation on Wednesday.
However, Robinhood was quickly accused of manipulation itself, which commentators argued went far beyond a group of small investors encouraging each other on Reddit to invest in GameStop.
“It’s hard to find market manipulation more flagrant than this,” journalist Glenn Greenwald tweeted. “But since it’s being done to protect the wealthiest and most powerful – Wall St oligarchs who own and control the establishment wings of both parties – it’s very hard to imagine the government treating it as such.”
It’s hard to find market manipulation more flagrant than this, but since it’s being done to protect the wealthiest and most powerful — Wall St oligarchs who own and control the establishment wings of both parties — it’s very hard to imagine the government treating it as such: https://t.co/VJnXpMAqkJ
— Glenn Greenwald (@ggreenwald) January 28, 2021
Robinhood won’t allow purchases of $AMC, $BB, $GME – ONLY SALES. This is a brazen market manipulation to disadvantage small investors & help big hedge funds like Melvin who shorted these stocks.Will the SEC stop this? Or will the SEC back the hedgies?https://t.co/AOJ1SAeM8U
— Chris Buskirk (@thechrisbuskirk) January 28, 2021
Use this form to file an SEC complaint about RobinHood’s conduct. You’ll notice if you click through to “market manipulation” it encompasses “Rigging quotes, prices, or trades to make it look like there is more or less demand for a security than is the case.” https://t.co/941yErQJuI
— Hank Oslo (@xctlot) January 28, 2021
Robinhood, whose self-declared mission is to “democratize finance for all,” was accused of protecting the fat cats at the expense of “the little guy.”
“We’re gonna name our company Robin Hood after the guy who redistributed wealth to the regular person”*regular people use app for wealth distribution*Robin Hood: pic.twitter.com/OGbiEVKM3N
— David Dennis Jr. (@DavidDTSS) January 28, 2021
It sounds like trading apps like Robin Hood are blocking people from purchasing/trading AMC ($AMC) and GameStop ($GME) stocks.How is this legal? The little guy starts making some money, and Wall Street blocks them from participating? That’s the definition of corruption.
— David Hookstead (@dhookstead) January 28, 2021
Remember when Robinhood was supposedly a “prosocial” good guy app allowing rank and file millennials to get into investing? Good times. pic.twitter.com/YkCigXkAeK
— William Southey (@wmsouthey) January 28, 2021
The surge in GameStop’s value inflicted devastating losses on Wall Street’s hedge funds, which had bet massive sums of money that the video games retailer would fail. Short sellers lost $14.3 billion on Wednesday alone, according to data firm S3 Partners, with one fund, Melvin Capital, requiring nearly $3 billion in bailout money from friendly firms to avoid bankruptcy.
One of the firms that bailed out Melvin Capital, Citadel Securities, also facilitates trades made on Robinhood, working as a sort of middleman between the app and Wall Street’s exchanges. As such, commentators accused Robinhood of doing Citadel’s bidding in shutting down trade.
Almost as if Robinhood has pretended all along to work for the people when it was really a proxy for Citadel
— zerohedge (@zerohedge) January 28, 2021
Just to be clear, Citadel, one of the largest clients of RobinHood, bailed out Melvin. Days later, RobinHood shut down purchases of $GME and other volatile names. Yes, the game is still rigged pic.twitter.com/5IC3pShFvJ
— Nate Anderson (@ClarityToast) January 28, 2021
Amid the fiasco, users flooded Google’s app store with one-star reviews for Robinhood. After a brief dip in value following the ban, GameStop’s stock value recovered when trading opened on Thursday morning, surging to an all-time high of $469, before plunging below $290.
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