Trading app Robinhood has enraged its users and triggered accusations of “flagrant” manipulation after it banned the buying of GameStop, AMC, Blackberry and Nokia stock, the trading of which put the squeeze on Wall Street.
Robinhood users found themselves unable to purchase stock in $GME, $AMC, $BB and $NOK (GameStop, AMC Theaters, Blackberry and Nokia) on Thursday morning, after an influx of amateur traders drove their share prices to dizzying heights in recent days, inflicting multi-billion dollar losses on Wall Street hedge funds who bet on the companies’ demise.
Also on rt.com Trading app Robinhood SHUTS DOWN GameStop stock, after Reddit traders embarrass Wall StreetThe app cited “market volatility” as the reason for the shutdown, which came after Wall Street insiders demanded something be done about the amateur traders’ “manipulation” of GameStop stock. Amid the frenzy and calls for regulation, the White House said it was monitoring the situation on Wednesday.
However, Robinhood was quickly accused of manipulation itself, which commentators argued went far beyond a group of small investors encouraging each other on Reddit to invest in GameStop.
“It's hard to find market manipulation more flagrant than this,” journalist Glenn Greenwald tweeted. “But since it's being done to protect the wealthiest and most powerful – Wall St oligarchs who own and control the establishment wings of both parties – it's very hard to imagine the government treating it as such.”
Robinhood, whose self-declared mission is to “democratize finance for all,” was accused of protecting the fat cats at the expense of “the little guy.”
The surge in GameStop’s value inflicted devastating losses on Wall Street’s hedge funds, which had bet massive sums of money that the video games retailer would fail. Short sellers lost $14.3 billion on Wednesday alone, according to data firm S3 Partners, with one fund, Melvin Capital, requiring nearly $3 billion in bailout money from friendly firms to avoid bankruptcy.
One of the firms that bailed out Melvin Capital, Citadel Securities, also facilitates trades made on Robinhood, working as a sort of middleman between the app and Wall Street’s exchanges. As such, commentators accused Robinhood of doing Citadel’s bidding in shutting down trade.
Amid the fiasco, users flooded Google’s app store with one-star reviews for Robinhood. After a brief dip in value following the ban, GameStop’s stock value recovered when trading opened on Thursday morning, surging to an all-time high of $469, before plunging below $290.
Think your friends would be interested? Share this story!