Dhe world’s largest social network closed the popular stock trading group Robinhood Stock Trades after the Gamestop hype. Wall Street Discussion Forum founder Allen Tran said he had received a notification from Facebook that the 157,000-member group would be banned for violating the rules. Reuters was able to see the letter. Facebook also confirmed the measure. The network did not want to comment on this.
Small investors have been joining Gamestop since mid-January and have ensured that the market value of the retail chain for computer games and entertainment software increased significantly. Investors duel with professional investors who had bet on falling prices and for whom billions are likely to be at stake.
Senate plans hearing
The excitement about the extreme price capers of the shares of Gamestop and other companies is also preoccupying the politicians. The future chairman of the US Senate banking committee, Sherrod Brown, announced on Thursday a hearing “on the current state of the stock market”. It was time for the SEC and Congress to make the economy work for everyone, not just Wall Street. “The people on Wall Street only care about the rules when they’re the one who hurts,” Brown’s statement said.
The background to this is the great annoyance of investors about restrictions on trading in papers from Gamestop and other companies, through which they see themselves being thwarted in a profit path. The online broker Robinhood in particular came under massive criticism and suspected of discriminating against small investors compared to large Wall Street investors. At companies such as Gamestop or the cinema chain AMC, hedge funds have recently lost a lot of money betting on falling prices, among other things because hobby traders organized themselves in online forums and successfully drove the company’s shares up.
The fact that Robinhood restricted the trade in the papers so that they can only be sold but no longer bought could now become a political issue and spark a larger debate about regulation. According to the American media, the Chair of the Finance Committee in the House of Representatives, Maxine Waters, is also planning a hearing. It should be about the recent turbulence in the financial market and the role of hedge funds in it. Other senior Democratic Party politicians such as Elizabeth Warren and Alexandria Ocasio-Cortez also called for clarification. Republican Party officials also did not understand Robinhood’s decision.
After the storm of outrage and the first complaints from investors who see themselves being driven out of price gains, Robinhood announced in the evening that it would ease the trading restrictions on the securities again. The shares of Gamestop then rose in after-hours trading by over 70 percent, those of AMC by almost 50 percent. The papers of other companies, such as the smartphone pioneer Blackberry, for which restrictions also applied, also grew strongly. Robinhood boss Vlad Tenev told the financial network CNBC that the trade restrictions had been decided to protect his own company and its customers.