Robinhood to allow ‘limited purchases’ on GameStop, AMC on Friday

GameStop embarked on another stock market adventure Thursday by briefly crossing $ 450 a share before closing at $ 193.60. Behind the meteoric rise: 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.

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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.

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

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 on Thursday that it has started restricting trading in shares of GameStop, AMC and headset maker Koss. Webull cited the “extreme volatility” of stocks limiting user transactions to closing positions. He then deleted the company these restrictions.

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

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

TD Ameritrade, another brokerage, announced on Wednesday that it will place restrictions on trading in shares 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 the interest of mitigating the risks to our business and our clients, we have put in place several restrictions on certain transactions in $ GME [GameStop], $ AMC [AMC Theaters] and other securities, ”said TD Ameritrade.

A TD Ameritrade spokesperson said the restrictions included increasing requirements needed to borrow money for stocks known as 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 [GameSpot] 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.