AOC, lawmakers call for hearings on Robinhood for GameStop share trading freeze

Video game retailer GameStop’s share price continued to soar Friday after investing in the app Robinhood allows users to buy stocks following the reaction of its previous purchase restrictions. Lawmakers have taken note of these restrictions and are calling for congressional action against the company.

Rep. Alexandria Ocasio-Cortez, a Democrat from New York; Rep. Rashida Tlaib, a Democrat from Michigan; and Sen. Ted cruz, a Republican from Texas, all agreed that there should be a hearing on Robinhood’s decision to restrict trading in GameStop, AMC and other stocks. The investment service said in a blog post Thursday that it would only allow the sale of shares in Blackberry, Express, Koss, Naked, Nokia, AMC and GameStop, due to recent market volatility. It reversed course on Thursday after markets closed and allowed app users to buy shares on Friday, although it does not allow the purchase of fractional shares of the aforementioned companies.

“This is unacceptable”, Ocasio-Cortez tweeted Thursday. “We now need to know more about @ RobinhoodApp’s decision to prevent retail investors from buying stocks while hedge funds can freely trade stocks as they see fit. As a member of the Financial Services Committee , I would support a hearing if necessary. “

Robinhood did not comment on the tweets from members of Congress.

Senator Sherrod Brown, Democrat of Ohio and incoming Chairman of the Senate Committee on Banking, Housing and Urban Affairs, tweeted Thursday he will hold a hearing on the current state of the stock market.

The people of Wall Street only care about the rules when they are hurt.

It’s time for the SEC and Congress to make the economy work for everyone.

As incoming chairman of @SenateBanking Commission, I will hold a hearing on the current state of the stock market. https://t.co/V9Hzp26jRT

– Sherrod Brown (@SenSherrodBrown) January 28, 2021

“People on Wall Street only care about the rules when they’re injured,” Brown said. “It’s time for the SEC and Congress to make the economy work for everyone.”

Arizona Republican Representative Paul Gosar on Thursday sent a letter to the Justice Department calling for an immediate investigation into Robinhood and Citadel Securities, a high-frequency trading company that provides Robinhood with nearly half of its revenue, according to a Bloomberg report.

New York Attorney General Letitia James released a statement Thursday in which she was aware of concerns about Robinhood and was reviewing the matter.

NEW: NY AG Letitia James says she’s looking into issues with Robinhood, the stock trading app that blocked the ability to buy GameStop stock today. pic.twitter.com/iQiXCVanOR

– Jon Campbell (@JonCampbellGAN) January 28, 2021

The US Securities and Exchange Commission said on Friday it would “carefully review actions taken by regulated entities that may disadvantage investors or unduly hamper their ability to trade certain securities“The agency also monitors the volatility of certain stocks.

Robinhood isn’t the only company to place restrictions on trading in GameStop shares. Webull tweeted Thursday that it would also prevent the purchase of shares in video game retailer as well as movie chain AMC and headphone maker Koss. SoFi added a warning to its GameStop and AMC page stating that its clearing partner, Apex Clearing, will prevent purchases of shares from both companies. Webull and SoFi, like Robinhood, have since overturned their decisions on Thursday afternoon. TD Ameritrade said on Wednesday it would restrict certain transactions involving the action of GameStop.

On Thursday, a class action lawsuit was filed in the Southern District of New York against Robinhood for restriction of stock trading. The complaint says that the company “deliberately, willfully and knowingly removed the ‘GME’ stock from its trading platform amid an unprecedented rise in shares … deprived retail investors of the ability to invest in the free market.