Democratic lawmakers are calling for hearings into Robinhood and other financial service companies' decision to prohibit customers from buying or even searching for certain stocks, and some Republicans are signaling support for the effort.
Popular stockbroker services were accused of manipulating the market by angry social media users Thursday after Robinhood, a company that lets customers trade stocks for free from their mobile phones, announced that shares in GameStop, AMC Entertainment, Nokia, and other "volatile" stocks would be restricted to position-closing only. The decision came in response to an internet campaign by retail traders — non-professional individual investors who day trade to make money on the side or for fun — to attempt to raise the stock price of GameStop after hedge funds signaled their intent to short the stock.
Motherboard reported Thursday that more than half of the users on Robinhood owned at least some GameStop stock and were now blocked from buying more. Needless to say, the outcry from Robinhood customers and other GameStop traders was near instantaneous and furious, but now lawmakers are weighing in.
Rep. Rashida Tlaib (D-Mich.) called the move by Robinhood and others "absurd," demanding a hearing in Congress on the issue.
"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," Tlaib tweeted.
This is beyond absurd. @FSCDems need to have a hearing on Robinhood's market manipulation. They're blocking the abi… https://t.co/RIfngcIg1P— Rashida Tlaib (@Rashida Tlaib)1611846204.0
She was joined by Rep. Alexandria Ocasio-Cortez (D-N.Y.), another member of the progressive "Squad" in Congress and a member of the House Financial Services Committee.
"This is unacceptable," Ocasio-Cortez said. "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."
She added in a follow-up tweet that any congressional inquiry "should not be limited solely to Robinhood."
"This is a serious matter. Committee investigators should examine any retail services freezing stock purchases in the course of potential investigations - especially those allowing sales, but freezing purchases."
At least one Republican wants to make an effort to investigate the trade freezes bipartisan. Sen. Ted Cruz (R-Texas) tweeted his support for Ocasio-Cortez's demand for an inquiry.
Fully agree. 👇 https://t.co/rW38zfLYGh— Ted Cruz (@Ted Cruz)1611852477.0
But Ocasio-Cortez is adamantly opposed to working with Cruz, who she's repeatedly accused of "trying to get me killed" because of his objection to the congressional certification of the Electoral College vote on Jan. 6, which Democrats say incited the violence at the Capitol that day.
I am happy to work with Republicans on this issue where there’s common ground, but you almost had me murdered 3 wee… https://t.co/R0WLAMg723— Alexandria Ocasio-Cortez (@Alexandria Ocasio-Cortez)1611855970.0
Another Republican senator, Tenessee's Marsha Blackburn, called on Robinhood to "free the traders."
Free the traders on @RobinhoodApp.— Marsha Blackburn (@Marsha Blackburn)1611854441.0
"Once again Wall Street is crushing the little person on Main Street," Blackburn tweeted. "Wall Street bet on America's decline and got caught. Now, they want to stop hard working Americans from betting on America's rise."