Rep. Josh Gottheimer (D-Wyckoff) joined calls for hearings into a brokerage blocking purchases of Gamestop stock amid a rally fueled by online retail traders.
“@RobinhoodApp needs to explain why they’re restricting trading & canceling stock orders,” the congressman said on Twitter. “That is NOT a free market. Let’s get to the bottom of this.”
Over recent weeks, share prices for Gamestop, a flagging video game retailer just beginning to move toward a greater focus on online sales, have skyrocketed as small traders on the Wall Street Bets subreddit, a foul-mouthed community of amateur stock traders.
They anticipated a payoff when Wall Street Hedge Funds’ short sale contracts come due Friday and into next week. A shorted stock is one borrowed and sold by traders predicting a drop in price. The traders purchase the stock and return the shares later, pocketing the difference if the price drops
Robinhood, an online brokerage used by many on Wall Street Bets, on Wednesday restricted trading for shares of Gamestop and some other firms favored by the message board, blocking retail traders from buying as Gamestop’s stock price dipped from a high of $468.89 to $197.44 at closing bell.
The House Finance Committee, where Gottheimer is a member, intends to hold hearings on potential market manipulation, Chairwoman Maxine Waters (D-Mo.) told Reuters.
The broker is also facing at least one class action suit over charges of market manipulation.
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