Users argue that the companies are blocking small investors from buying stocks, but not limiting hedge funds and other bigger investors.
By Alex Veiga| Associated Press Robinhood and other retail brokerages are taking steps to tamp down the speculative frenzy surrounding companies such as GameStop, but the actions only sparked more volatility and an outcry from users of the platforms and some members of Congress that small investors are being treated unfairly. GameStop stock has rocketed from below $20 earlier to close around $350 Wednesday as a volunteer army of investors on social media challenged big institutions who had placed market bets that the stock would fall. The action was even wilder Thursday: The stock swung between $112 and $483. At midday it was down 27% at $255. Robinhood said Thursday investors would only be able to sell their positions and not open new ones in some cases, and Robinhood will try to slow the amount of trading using borrowed money. Besides GameStop, Robinhood said trading in stocks such as AMC Entertainment, Bed Bath & Beyond, Blackberry, Nokia, Express Inc., Koss Corp., American Airlines, Tootsie Roll, Trivago and Naked Brand Group would be affected by the new restrictions. Interactive Brokers also placed option trading of AMC, BlackBerry, Express, GameStop and Koss “into liquidation,” citing extraordinary volatility in the markets. It also tightened margin requirements indefinitely on “short stock positions.” Charles Schwab and TD Ameritrade took similar steps to restrict trading on their platforms Wednesday. Robinhood’s stated goal is to “democratize” investing and to bring more regular people into investing. The company has forced huge, ground-shaking changes for the brokerage industry, such as its decision to charge zero commissions for customers trading stocks and exchange-traded funds.
