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Scott Martin of Kingsview Wealth Management and Carol Roth, creator of the Future File legacy planning system, provide their thoughts on how Wall Street and Robinhood have responded to Gamestop’s short squeeze.
Robinhood extended its trading restrictions from 13 stocks on Thursday to 50 on Friday afternoon.
The shortlisted titles range from Starbucks to Rolls-Royce, the mobile brokerage app facing high volume of transactions from last week to weekends.
| Teleprinter | security | Latest | Change | % Change |
|---|---|---|---|---|
| SBUX | STARBUCKS CORPORATION | 96.81 | -1.34 | -1.37% |
| RR | n / A | n / A | n / A | n / A |
Robinhood did not immediately respond to a request from Fox Business, but its website directs users to a blog post on Thursday for more background on the restrictions.
“As a brokerage firm, we have many financial requirements, including SEC net capital obligations and clearing house deposits,” the post read. “… These requirements exist to protect investors and markets and we take our responsibilities to meet them seriously, including through the actions we have taken today.”
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The mobile brokerage app came under intense scrutiny Thursday after initially announcing it was restricting trading for “certain securities at close of positions only,” including GameStop, AMC, Nokia and 10 others.
The Robinhood app on a smartphone in New York. (AP Photo / Patrick Sison)
Robinhood founder Vladimir Tenev in a Thursday evening statement said that from Friday the app would start allowing limited purchases of the titles it was restricting and “would continue to monitor the situation and may make adjustments if necessary “.
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Users can purchase a maximum of one share for the majority of securities on the Robinhood shortlist and up to five shares for other securities on the list, such as Rolls-Royce. The company’s website notes that “the limits may be subject to change throughout the day.”
“We cannot control … the lightning-fast dissemination of information and disinformation that takes place on social media, and for that I am extremely sorry to our customers and staff,” Tenev said Thursday.
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The restrictions came amid an unexpected surge in stock prices that short sellers expected to drop. Retail investors boosted by the Reddit WallStreetBets online forum have crammed into stocks ranging from GameStop to Blackberry and Bed Bath & Beyond, creating an increase in trading volume this week.
| Teleprinter | security | Latest | Change | % Change |
|---|---|---|---|---|
| GME | GAMESTOP CORP | 325.00 | +131.40 | + 67.87% |
| BB | BLACKBERRY LIMITED | 14.10 | -0.55 | -3.75% |
| BBBY | BED BATH & BEYOND INC. | 35.33 | +1.69 | + 5.02% |
Some users of the app have joined a class action lawsuit against Robinhood which alleges that the company knowingly and willfully restricted certain securities transactions, putting investors who use the app at a disadvantage.
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A number of celebrities and politicians on both sides of the political spectrum have condemned Robinhood’s decision to restrict trade, and New York Attorney General Letitia James announced Thursday that she was investigating the move.
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