GameStop’s stock market adventure continues, with shares jumping more than 70% in early trading on Friday. The spike comes as Robinhood opens “limited buys” of GameStop, AMC and other stocks after the trading app restricted some transactions the day before. However, the app on Friday confirmed that it temporarily turned off instant buying power for cryptocurrencies due to “extraordinary market conditions,” as the price of bitcoin anda digital coin inspired by a popular dog meme also rose sharply. Behind meteoric rise of GameStop, dogecoin and other stocks: .
On Thursday morning, Twitter users began posting screenshots of their Robinhood app that showed a message appended to the pages of GameStop, AMC, Nokia and Bed, Bath and Beyond: “This stock is not supported on Robinhood.”
Robinhood explained the move in a blog post before trading opened. “In light of recent volatility, we are restricting transactions for certain securities to position closing only, including $AMC, $BB, $BBBY, $EXPR, $GME, $KOSS, $NAKD and $NOK,” the company wrote. In addition to AMC; Bed, Bath and Beyond; GameStop and Nokia, the companies listed by ticker symbol are phone maker BlackBerry, fashion retailer Express, headphone maker Koss, and underwear company Naked Brand Group.
Robinhood later sent an email to customers saying it would allow “limited buys” of those securities starting Friday. It made the decision because of US Securities and Exchange Commission regulations.
Robinhood CEO Vlad Tenev went on CNBC Thursday afternoon to explain why the investment app decided to restrict users from purchasing shares of GameStop, AMC and other companies.
“In order to protect the firm and protect our customers, we had to limit buying in these stocks,” Tenev said. He also denied there were any liquidity issues with the company.
The Twitter account, which is tied to a Reddit community that’s been, said the freeze harmed small traders and favored the Wall Street establishment. “Individual investors are being stripped of their ability to trade on the Robinhood app,” the tweet said. “Meanwhile, hedge funds and institutional investors can continue to trade as normal.”
A class-action lawsuit was filed Thursday in the Southern District of New York.
Webull, another investing service, tweeted Thursday that it had begun restricting trades on shares of GameStop, AMC and Koss. Webull cited the “extreme volatility” of the stocks in limiting user transactions to closing positions. It later removed those restrictions.
US Rep. Rashida Tlaib, a Democrat from Michigan, called on the House Committee on Financial Services to hold a hearing on Robinhood’s actions. She described its efforts as “market manipulation”.
This is beyond absurd. FSC Dems need to have a hearing on Robinhood’s market manipulation. They’re blocking the ability to trade to protect Wall St. hedge funds, stealing millions of dollars from their users to protect people who’ve used the stock market as a casino for decades.
Other members of Congress, including, agreed with the call for a hearing. A TD Ameritrade, another brokerage, said Wednesday that it would put restrictions on the trading of stocks for GameStop, AMC and others. The brokerage firm confirmed the restrictions, saying it made the decisions “out of an abundance of caution amid unprecedented market conditions and other factors.”
“In the interest of mitigating risk for our company and clients, we have put in place several restrictions on some transactions” in GameStop, AMC Theaters “and other securities,” TD Ameritrade said.
A TD Ameritrade spokesperson said the restrictions include increasing requirements needed to borrow money for stocks, known as a margin, and limiting transactions such as short sales.
Nasdaq CEO Adena Friedman told CNBC on Wednesday that the stock exchange would halt trading and investigate if it believed someone was manipulating the market. AMC is listed on Nasdaq, while GameStop is traded on the New York Stock Exchange.
William Galvin, secretary of the Commonwealth of Massachusetts, told Barron’s the New York Stock Exchange should “consider simply suspending GameStop for a month.”
The SEC is also following the situation.
“We are aware of and actively monitoring the on-going market volatility in the options and equities markets, and consistent with our mission to protect investors and maintain fair, orderly and efficient markets,” the SEC said in a statement Wednesday. “We are working with our fellow regulators to assess the situation and review the activities of regulated entities, financial intermediaries and other market participants.”
The White House is “monitoring the situation,” White House press secretary Jen Psaki said Wednesday.
Correction, Jan. 28: An earlier version of this story incorrectly said TD Ameritrade had restricted new purchases of GameStop and AMC stocks. It’s restricting certain trades, but users are still able to purchase new shares from those companies.