Robinhood INC: stealing from the poor?
Written By: Matthew Schultz
After an unbelievable rally spurred on by the Reddit users of r/wallstreetbets, the popular financial services company Robinhood Markets, Inc has seeming turned on its users. Currently, allegations made by retail investors against Robinhood claim that the company forced uses to sell non-marginalized funds against the will of their buyers, and at potentially steep losses.
January 27, 2021, users of Robinhood and other major equity trading platforms were experiencing issues buying shares of companies like GameStop and AMC Entertainment. On January 28, 2021 Robinhood released the following statement,
“In light of recent volatility, we are restricting transactions for certain securities to position closing only, including $AAL, $AMC, $BB, $BBBY, $CTRM, $EXPR, $GME, $KOSS, $NAKD, $NOK, $SNDL, $TR, and $TRVG. We also raised margin requirements for certain securities.”Source: Keeping Customers Informed Through Market Volatility — Under the Hood (robinhood.com)
However, the interference into the actions of its userbase go further than that. According to The Daily Beast, Independent, Business Insider, and The Hill contributor Max Burns, Robinhood is now selling shares against the will of their owners.
Additionally, according to Max many of the effected users did not buy on margin, making the choice by Robinhood to forcibly liquidate positions quite odd and without justification. Since Robinhood did not loan any money to those particular traders, the company doesn’t actually stand to risk anything. Many users on Twitter are accusing the company of taking illegal action.
If the allegations are to be believed, Robinhood forced one user to sell 4,500 shares of GameStop at $118.93 near the bottom of the price chart for the day. GameStop closed on the same day at $197.44.
Several members of Congress have already called for investigation.