The online trading platform Robinhood is in hot water with users and politicians, and Senator Elizabeth Warren is the latest notable figure to question the platform’s decisions during the GameStop stock surge in late January. Warren (D-Mass.) asked Robinhood to explain why it restricted trading on GameStop shares as notable hedge funds suffered massive losses during the “short squeeze.”
“Robinhood has a responsibility to treat its investors honestly and fairly, and provide them with access to the market under a transparent and consistent set of rules,” Warren wrote in her letter, according to CNBC. “It is deeply troubling that the company may not be doing so.”
During the surge, Robinhood restricted the buying of a handful of “meme stocks,” as well as increasing the margin requirements on certain stocks and options. This move caused its userbase to explode with anger on social media as Wall Street hedge funds and institutional investors continued trading the restricted stocks. The platform is now facing many lawsuits in multiple jurisdictions.
This is unacceptable.
We now need to know more about @RobinhoodApp’s decision to block retail investors from purchasing stock while hedge funds are freely able to trade the stock as they see fit.
As a member of the Financial Services Cmte, I’d support a hearing if necessary. https://t.co/4Qyrolgzyt
— Alexandria Ocasio-Cortez (@AOC) January 28, 2021
Robinhood CEO Vladimir Tenev has said that the decision to restrict trading was made to protect the company’s own financial obligations, not due to any direction from hedge fund managers. Tenev is expected to testify before the House Financial Services Committee on February 18 as part of a hypothetical investigation into the GameStop stock situation. Warren isn’t the only politician to express concern over the situation; fellow Democrats Alexandria Ocasio-Cortez and Rashida Tlaib called for such a hearing.