Is It Righteous Anger ? Is It Democratizing The Financial World?
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On January 28, 2021, Robinhood restricted the trading of certain stocks following an effort by users of r/wallstreetbets subreddit to drive up their price. This decision attracted condemnation from internet users on the subreddit and on Twitter.[81][82] United States House Representative Rashida Tlaib called for a hearing by the House Committee on Financial Services, tweeting that Robinhood’s action was “market manipulation” to protect hedge funds.[82]Democratic representative Alexandria Ocasio-Cortez tweeted the restriction was “unacceptable,” saying Congress needed to know more about the company’s decision “to block retail investors from purchasing stock while hedge funds are freely able to trade the stock as they see fit”, with Republican Ted Cruz and business magnate Elon Musk backing the sentiment.[83][84][85][86]
Following the controversy, the app suffered an influx of one-star reviews on the Google Play app store.[87] Google deleted at least 100,000 such reviews, calling them “coordinated or inorganic”.[88][89][90] Protesters also showed up outside Robinhood headquarters in Menlo Park, California, at the Securities and Exchange Commission headquarters in Washington, D.C., and the New York Stock Exchange.[91] On January 28, a class-action lawsuit against Robinhood for alleged market manipulation was filed in the Southern District of New York. The lawsuit alleges that the app “purposefully, willfully, and knowingly removing the stock ‘GME’ from its trading platform in the midst of an unprecedented stock rise […] deprived retail investors of the ability to invest in the open-market and manipulating the open-market.”[92][93][94][92] Later that day, the company announced that it would reallow limited buys of the stocks on January 29.[95]
Louis Rossmann, Reddit’s WallStreetBets user, joins the Yahoo Finance Live panel to weigh in on GameStop trading as the stock falls and Robinhood halts trading on the stock, in the video “Reddit user explains short-seller squeeze inception“, below:
The fact is: with the advanced technology, consumers are having access to much more information much more quickly than in the past. Much of the historical rules and regulations may need to be evolved to greater transparency and standardization, in time.
To keep some of our readers abreast of what is happening with GameStop short squeeze, allow me to share the press release/public statement from Security Exchange Commission Acting Chair Allison Herren Lee and Commissioner Hester M. Peirce, Commissioner Elad L. Roisman, and Commissioner Caroline A. Crenshaw, dated January 29, 2021, in italics, below:
The Commission is closely monitoring and evaluating the extreme price volatility of certain stocks’ trading prices over the past several days. Our core market infrastructure has proven resilient under the weight of this week’s extraordinary trading volumes. Nevertheless, extreme stock price volatility has the potential to expose investors to rapid and severe losses and undermine market confidence.
As always, the Commission will work to protect investors, to maintain fair, orderly, and efficient markets, and to facilitate capital formation. The Commission is working closely with our regulatory partners, both across the government and at FINRA and other self-regulatory organizations, including the stock exchanges, to ensure that regulated entities uphold their obligations to protect investors and to identify and pursue potential wrongdoing. The Commission will closely review actions taken by regulated entities that may disadvantage investors or otherwise unduly inhibit their ability to trade certain securities.
In addition, we will act to protect retail investors when the facts demonstrate abusive or manipulative trading activity that is prohibited by the federal securities laws. Market participants should be careful to avoid such activity. Likewise, issuers must ensure compliance with the federal securities laws for any contemplated offers or sales of their own securities.
The Commission will continue our work on behalf of investors and the markets. In this regard, we hope to facilitate a robust public dialogue among market participants and investors on the structure and operation of our securities markets. Members of the public can submit tips or complaints through the Commission’s website using this online form. Members of the public with questions should contact the Commission’s Office of Investor Education and Advocacy at 1-800-732-0330, ask a question using this online form, or email us at Help@SEC.gov.
Former SEC Commissioner Laura Unger discusses what steps regulators should take to avert another GameStop short squeeze frenzy situation. For access to live and exclusive video from CNBC, in the video “Fmr. SEC commissioner on GameStop frenzy: Certainly valid questions about market manipulation“, below:
Reddit’s Alexis Ohanian said Thursday that the GameStop stock-trading frenzy, originating in large part on the online platform he helped create, is a turning point in the U.S. investing landscape, in the video “Reddit co-founder on WallStreetBets short squeeze: ‘This is a drastic shift’“, below:
Jaime Rogozinski, founder of the WallStreetBets trading forum on Reddit, says people are “placing bets on a market in a way that they are actually affecting the odds of the outcome.” He speaks with CNN’s Julia Chatterley about the stock frenzy, in the video “WallStreetBets founder on GameStopp: There is no precedent for this“, below:
Barstool Sports founder Dave Portnoy says Robinhood’s restrictions on trading GameStop shares in the wake of the “short squeeze” was done to protect hedge funds who were shorting the stock and losing millions, in the video “Barstool’s Portnoy rips Robinhood: They cratered the stock on purpose“, below:
Jordan Belfort is an American author and former stockbroker who inspired The Wolf of Wall Street. He speaks to Sky News about his opinion of the ‘short squeeze’ being experienced by GameStop, and gives his advice to investors, in the video “GameStop: The real Wolf of Wall Street’s advice“, below:
Robinhood could have raised the margin requirement instead of using asymmetrical halt to avoid problem. Jordan Belfort reminds every one, “Be careful and make money. Don’t stay in longer than one should and don’t get greedy.”
Class action lawsuit is already filed at Southern District of New York and competing brokerage firms are offering to help Robinhood’s clients to make the transfer easily.
Retail investor or consumers are reacting quickly, in the video “Robinhood Exodus & Class Action Lawsuit already filed“, below:
Gathered, written, and posted by Windermere Sun-Susan Sun Nunamaker More about the community at www.WindermereSun.com
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