Robinhood allows ‘limited purchases’ on GameStop, AMC

GameStop’s stock market adventure continues, with stocks surging more than 70% at the start of the session on Friday. The spike comes as Robinhood opens “limited buys” from GameStop, AMC and other stocks after the trading app restricted some trades the day before. However, the app confirmed on Friday that it was temporarily disabling instant purchasing power for cryptocurrencies due to “extraordinary market conditions”, such as the price of bitcoin and dogecoin – a digital piece inspired by a popular dog meme – also rose sharply.

Behind the meteoric rise of GameStop, dogecoin, and other stocks: Reddit users who banded together to take on the establishment of Wall Street.

The rebellion hiccupped when individual investors discovered some trading sites and applications had restricted trading in the securities of the beaten video game retailer, as well as the AMC movie chain and other companies. Robinhood, a popular investor app, has prevented customers from buying more shares of several 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. In addition to AMC; Bed, Bath and Beyond; GameStop and Nokia, the companies listed by ticker symbol are phone maker BlackBerry, fashion retailer Express, headphone maker Koss, and underwear company Naked Brand Group. 

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

Robinhood CEO Vlad Tenev went on CNBC Thursday afternoon to explain why the investment app decided to restrict users from purchasing shares of GameStop, AMC and other companies. 

“In order to protect the firm and protect our customers, we had to limit buying in these stocks,” Tenev said. He also denied there were any liquidity issues with the company. 

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]”The tweet read.” Meanwhile, hedge funds and institutional investors can continue to trade normally.

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

Webull, another investment service, tweeted Thursday that it has started restricting trading in shares of GameStop, AMC and Koss. Webull cited the “extreme volatility” of stocks by limiting user transactions to closing positions. He then deleted these restrictions.

U.S. Representative Rashida Tlaib, a Democrat from Michigan, called on the House Financial Services Committee to hold a hearing on Robinhood’s actions. She called her efforts “market manipulation”.

It is beyond the absurd. @FSCDems need to have a hearing on Robinhood’s market manipulation. They are blocking the ability to trade to protect Wall St.’s hedge funds, stealing millions of dollars from their users to protect people who have used the stock exchange as a casino for decades. https://t.co/CGkJxVfzkv

– Rashida Tlaib (@RashidaTlaib) January 28, 2021

Other members of Congress, including Rep. Alexandria Ocasio-Cortez and Senator Ted Cruz, accepted the request for a hearing.

TD Ameritrade, another brokerage firm, said Wednesday it would impose restrictions on stock trading for GameStop, AMC and others. The brokerage firm confirmed the restrictions, saying it had made the decisions “out of prudence in an unprecedented market environment and other factors.”

“In order to mitigate risk to our company and our customers, we have put in place several restrictions on certain transactions” in GameStop, AMC Theaters “and other titles,” said TD Ameritrade.

A spokesperson for TD Ameritrade said the restrictions include increasing requirements to borrow money for stocks, called margin, and limit transactions such as short sales.

Nasdaq CEO Adena Friedman told CNBC on Wednesday that the stock market will stop trading and investigate if it believes anyone is manipulating the market. AMC is listed on the Nasdaq, while GameStop is listed on the New York Stock Exchange.

William Galvin, Secretary of the Commonwealth of Massachusetts, told Barron’s that the New York Stock Exchange should “consider simply suspending [GameStop] for a month.”

The SEC is also monitoring the situation.

“We are aware and actively monitor the continued market volatility in the options and equity markets, and in accordance with our mission to protect investors and maintain fair, orderly and efficient markets,” the SEC said in a statement. declaration Wednesday. “We are working with our fellow 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, January 28: An earlier version of this story incorrectly said that TD Ameritrade restricted new purchases of GameStop and AMC shares. This restricts some trades, but users can still buy new shares at those companies.