AOC and lawmakers call for hearings on Robinhood for freezing trades on GameStop stock

Members of Congress have their eyes on the popular investing app.

Oscar Gonzalez Former staff reporter
Oscar Gonzalez is a Texas native who covered video games, conspiracy theories, misinformation and cryptocurrency.
Expertise Video Games, Misinformation, Conspiracy Theories, Cryptocurrency, NFTs, Movies, TV, Economy, Stocks
Oscar Gonzalez
3 min read
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The price of stocks for video game retailer GameStop continued to skyrocket Friday after investing app Robinhood let users buy shares following backlash to its previous restrictions on purchasing. Lawmakers have taken notice of those restrictions and are calling for congressional action on the company. 

Rep. Alexandria Ocasio-Cortez, a Democrat from New York; Rep. Rashida Tlaib, a Democrat from Michigan; and Sen. Ted Cruz, a Republican from Texas, all were in agreement that there should be a hearing on Robinhood's decision to restrict the trading of GameStop, AMC and other stocks. The investing service said in a blog post Thursday that it would allow only the selling of shares from Blackberry , Express, Koss, Naked, Nokia , AMC and GameStop, due to the recent market volatility. It reversed course Thursday after the markets closed and allowed app users to purchase stocks Friday, although it is not allowing the buying of fractional shares from the aforementioned companies. 

"This is unacceptable," Ocasio-Cortez tweeted Thursday. "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. As a member of the Financial Services Cmte, I'd support a hearing if necessary."

Robinhood had no comment on the tweets from the members of Congress. 

Sen. Sherrod Brown, a Democrat from Ohio and the incoming chairman of the Senate Committee on Banking, Housing, and Urban Affairs, tweeted Thursday that he'll hold a hearing about the current state of the stock market. 

"People on Wall Street only care about the rules when they're the ones getting hurt," Brown said. "It's time for the SEC and Congress to make the economy work for everyone." 

Rep. Paul Gosar, a Republican from Arizona, sent a letter to the Department of Justice on Thursday calling for an immediate investigation into Robinhood and Citadel Securities, a high-frequency trading firm that provides Robinhood with almost half its revenue, according to a report from Bloomberg. 

New York Attorney General Letitia James released a statement Thursday saying she is aware of the concerns regarding Robinhood and is reviewing the matter. 

On Friday, the US Securities and Exchange Commission said it will "closely review actions taken by regulated entities that may disadvantage investors or otherwise unduly inhibit their ability to trade certain securities." The agency is also monitoring the volatility of certain stocks.  

Robinhood isn't the only company to put restrictions on trading GameStop stock. Webull tweeted Thursday that it would also prevent the buying of stocks from the video game retailer as well as from theater chain AMC and headphone manufacturer Koss. SoFi added a warning to its GameStop and AMC page saying that its clearing partner, Apex Clearing, will prevent purchases of shares from the two companies. Both Webull and SoFi, like Robinhood, have since reversed their decisions, Thursday afternoon. TD Ameritrade said Wednesday that it would restrict certain trades involving GameStop's stock

On Thursday, a class-action lawsuit was filed in the Southern District of New York against Robinhood for restricting stock trades. The complaint says that the company "purposefully, willfully, and knowingly removing the stock 'GME' from its trading platform in the midst of an unprecedented stock rise ... deprived retail investors of the ability to invest in the open-market."

Watch this: AOC looks into Robinhood's business practices