Robinhood Faces Bipartisan Backlash After Banning Trades On Specific Stocks

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Phillip Nieto Contributor
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In a rare moment of unity, Republican and Democratic lawmakers came together Thursday to criticize trading app Robinhood’s decision to restrict users from buying stocks that have shaken Wall Street, including GameStop, AMC and BlackBerry.

The company restricted users from buying these stocks after amateur investors from the subreddit r/WallStreetBets drove up the stock prices that had been shorted by large hedge funds.

Elected officials including Republican Texas Sen. Ted Cruz and New York Democratic Rep. Alexandria Ocasio-Cortez condemned Robinhood for allegedly defending hedge funds financially rocked from the stock surge.

“This is unacceptable. We now need to know more about @RobinhoodApp’s decision to block retail investors from purchasing stock while hedge funds are freely able to trade the stock as they see fit,” Ocasio-Cortez wrote, adding that she would support a potential hearing from the House Finacial Services Committee.

Cruz quote-tweeted Cortez with a statement concurring with “The Squad” leader.

More lawmakers released statements following the Cruz-Cortez exchange, including Democrat Massachusetts Sen. Elizabeth Warren, Republican North Carolina Rep. Madison Cawthorn, Democrat Michigan Rep. Rashida Tlaib, Republican Colorado Rep. Lauren Boebert, Democrat California Rep. Ro Khanna and Republican Arizona Rep. Paul Gosar.

GameStop’s stock price collapsed by 62% Thursday, resulting in trading freezes. BlackBerry followed suit, collapsing 44%, AMC Entertainment was down 67% and Nokia fell 30%, according to The Hill. The Dow Jones Industrial Average bounced back by more than 500 points before noon after heavy losses Wednesday.

Yesterday, the r/WallStreetBets forum page became private, and Discord banned the online message board from communicating on their platform “after repeated warnings” for “hateful and discriminatory content.”(RELATED: Class Action Lawsuit Filed Against Robinhood)

The incoming chairman of the Senate Banking Committee, Democrat Ohio Sen. Sherrod Brown, announced Thursday the committee would host a hearing on the “current state of the stock market,” according to Bloomberg.

“People on Wall Street only care about the rules when they’re the ones getting hurt. American workers have known for years the Wall Street system is broken — they’ve been paying the price,” Brown said. “It’s time for the SEC and Congress to make the economy work for everyone, not just Wall Street.”