Robinhood is facing lawsuits after restricting the trading of GameStop stock

The outrageous $GME saga continues, with Robinhood’s app shutting users out of key trades and lawmakers speaking up.

Stonkz (Source: Giphy)

Robinhood is facing lawsuits after restricting the trading of GameStop stock

Honestly, we tried not to write about GameStop ($GME) today, but this story is absolutely bonkers (seriously, when is the Michael Lewis book coming)?

If you want to catch up on how this saga has pitted Reddit day traders against fat-cat hedge funds, we’ve got you covered here.

On to the updates:

  • In addition to $GME, traders following the r/WallStreetBets subreddit have been piling into AMC ($AMC), Blackberry ($BB), and Nokia ($NOK).
  • At market open on Thursday, all of these stocks took a beating, and Robinhood — among the most popular trading apps for Redditors — restricted trading in $AMC and $GME (only allowing them to close out positions).
  • Robinhood’s tactics were so questionable lawmakers from both sides (AOC + Ted Cruz) dunked on the app…but don’t expect that unlikely pair to be working together on a bill anytime soon.
  • One hedge fundD1 Capital — is among the biggest losers betting against r/WallStreetBets and also just so happens to be one of Robinhood’s biggest investors.
  • Users have filed lawsuits against Robinhood for restricting trading in $GME (incredibly, more than half of Robinhood users have exposure to the stock).
  • In response, Robinhood says it restricted trading in response to SEC capital requirements. It also said it would allow limited trading of some restricted names — $GME and $AMC both jumped 40%+ after hours on the news.
  • Senator Elizabeth Warren lashed out at the SEC, saying ““We need an SEC that has clear rules about market manipulation and then has the backbone to get in and enforce those rules.”

This story is very far from over and we’ll have more on Monday.

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Topics: Regulation Stocks

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