RobinHood Restricts GameStop, AMC, Users File SEC Complaints & Call Senators
January 27th, 2020
By Austin Smith in Finance
On January 28th, 2021, RobinHood restricted the ability of investors on its platform to purchase shares in GameStop (NYSE: GME), AMC Entertainment Holdings Inc. (NYSE: AMC) and Nokia Corporation (NYSE: NOK). At the time of writing this article, RobinHood users are still unable to purchase more shares of the aforementioned securities and can only sell their positions. The broker’s decision to restrict purchases to “position-closing only” is attributed to “ongoing volatility”.
Users have taken to Twitter to voice their concerns of possible market manipulation by hedge funds and point out the hypocrisy of the restriction with a comparison of RobinHood’s own words. Dozens of Twitter users have voiced that they will file Securities and Exchanges Commission complaints on top of closing their RobinHood investment account.
One Twitter user stated:
Robinhood’s decision to make certain securities “position-closing only” came a day after the Securities and Exchanges Commission (SEC) announced an investigation into recent market activity. The SEC is responsible when it comes to market manipulation and other fraudulent practices in the realm of securities and exchanges.
Why does this restriction matter to investors of GME, AMC, & NOK?
Investors who hold shares of these restricted companies are now unable to receive accurate share value representation that reflects the demand of the stocks. RobinHood users were not able to purchase more shares and could not increase the value of the stocks that were restricted. The demand of a stock plays a significant role in the valuation of its share price and with users unable to purchase more shares, restricted stocks have fallen sharply in value. A decline in value to the share price of all restricted stocks could be directly attributed to RobinHood’s decision to restrict share purchases.
Another Twitter user, succinctly explained the phenomenon, in this statement:
The rating of the official RobinHood trading app on the Google Play store has decreased dramatically to a rating of 1 star out of 5 possible.
Robinhood users have also called for their representatives in the senate to launch an official senate investigation into the restrictions implemented by RobinHood and other brokers.
Class action lawsuits have been filed against RobinHood and its decision to restrict stocks such as $AAL, $AMC, $BB, $BBBY, $CTRM, $EXPR, $GME, $KOSS, $NAKD, $NOK, $SNDL, $TR, and $TRVG. Support for the disdain towards RobinHood and its restriction decision has not been hard to find as Rep. Alexandria Ocasio-Cortez released a statement on Twitter in support of those who disagree with the restriction.
A point often brought up by users on Twitter with mentions towards @RobinhoodApp, is that the company’s restriction decision has united both sides of the political aisle. Sen. Ted Cruz, a Republican who, at most times, would find himself in disagreement with Alexandria Ocasio-Cortez, Tweeted a reply to her statement that he agrees.
Sen. Ted Cruz’s reply to Alexandria Ocasio-Cortez’s Tweet simply stated:
Retail investors who placed investments with securities that were eventually restricted by Robinhood may not have seen the end of the journey so far. It is entirely possible that the decision by Robinhood to restrict trades of the previously mentioned stocks will lead to further regulatory action, and official investigation by the senate, and a class-action lawsuit settlement.
Disclaimer:
The author does hold a position with the stock(s) pictured or mentioned within this article. Advice within this article is purely for informational or entertainment purposes only. The author and Discoveredinnovation.com do not accept liability of your use of this website’s content.
