Newsweek reached out to Robinhood for comment but did not hear back before publication. Senator Ted Cruz, who has often feuded with the congresswoman, also alluded to the irony of the app's announcement, posting a screenshot of a 2016 tweet from Robinhood that read, "Let the people trade." Even Ocasio-Cortez's political rivals have commented on Robinhood's decision. However, the platform's trading halt has been criticized as an effort to appease Wall Street establishment-types. By Zoe Christen Jones, Justin Bey Updated on: Janu/ 8:19 PM / CBS News Robinhood and other major trading platforms on Thursday restricted trading of GameStop and other popular stocks. "We also raised margin requirements for certain securities." In light of recent volatility, we are restricting transactions for certain securities to position closing only, including $AAL, $AMC, $BB, $BBBY, $CTRM, $EXPR, $GME, $KOSS, $NAKD, $NOK, $SNDL, $TR, and $TRVG," the investment app said in a blog post. "We continuously monitor the markets and make changes where necessary. The financial services company defended its decision to do so in a statement made Thursday. Just two hours after Robinhood's announcement, shares of GameStop quickly moved into the negative territory, falling 50 percent from Wednesday's closing price. And this shows the need for a financial transaction tax on hedge fund shorting and SEC regulations on short selling practices." Robinhood has added new limits to its app to restrict users from buying or trading any of the popular Reddit r/WallStreetBets stocks, including GameStop (GME), AMC (AMC), BlackBerry (BB), Bed Bath & Beyond (BBBY), Nokia (NOK), and more. Robinhood blocks users from buying GameStop and AMC shares By Thornton McEnery and Lisa Fickenscher Janu10:18am Updated Robinhood clamped down on trades of volatile stocks. The progressive firebrand's calls for an investigation earned the support of her fellow colleague Representative Ro Khanna who replied, "Yes We need an investigation into RobinhoodApp's decision and who influenced that. Ocasio-Cortez called Robinhood's trading halt "unacceptable" in a tweet Thursday. Alexandria Ocasio-Cortez (D-NY) speaks during a news conference to introduce legislation to transform public housing as part of her Green New Deal outside the U.S.
Committee investigators should examine any retail services freezing stock purchases int he course of potential investigations - especially those allowing sales, but freezing purchases."
"Inquiries into freezes should not be limited solely to Robinhood," she added. "As a member of the Financial Services Cmte, I'd support a hearing if necessary," Ocasio-Cortez wrote. In response, Ocasio-Cortez threatened to hold a congressional hearing over the trading app's actions However, Robinhood was quick to take drastic steps on Thursday, barring users from being able to freely trade their GameStop stock and only allowing them to close out their positions. This week, shares of GameStop and AMC Entertainment ballooned more than 400 and 300 percent, respectively. The idea to stick it to Wall Street emerged out of a Reddit chat room, where rookies planned to invest in names like GameStop and AMC Entertainment that are heavily shorted by hedge funds. On Thursday, Robinhood and other retail brokerages restricted trading in GameStop and other stocks after shares shot up and led to big losses for hedge funds.
"We now need to know more about decision to block retail investors from purchasing stock while hedge funds are freely able to trade the stock as they see fit." "This is unacceptable," the congresswoman tweeted. saying ‘This stuff is just too risky,'” said Larry Tabb, Bloomberg Intelligence’s head of market structure.Representative Alexandria Ocasio-Cortez slammed free-stock trading app Robinhood after it restricted trading of GameStock after Wall Street was sent into a frenzy this week. Other brokerages also cited increased deposit requirements as a reason for trade restrictions. When there’s a big surge in trades, brokerages need more money to assure the DTCC.
Online brokerages are required to post money with the DTCC to cover customers’ transactions while they wait for their orders to settle. Robinhood eventually negotiated that rate down to $1.4 billion, but the company still had to raise $1 billion in emergency funds from existing investors, in addition to exhausting credit lines, to cover the base. The $3 billion deposit requirement was ten times what it had typically been, Tenev said. Tenev said Robinhood’s operations team received a request early Thursday morning from the National Securities Clearing Corporation (NSCC), a subsidiary under the Depository Trust and Clearing Corporation (DTCC), for a security deposit of $3 billion to back up a surge in trade volume related to GameStop and other stocks. See Also: Who Should Pay for the GameStop-Robinhood Chaos? SEC, Lawmakers Ponder Options
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