"Only Retail Investors Blocked Instead of Short Selling" Anger of US Politicians

US Bipartisan Politicians Unite in Opposition to Robinhood GameStop Stock Trading Restrictions
Indicate Possible Overhaul of Short Selling and Wall Street Trading Practices
House Speaker Pelosi Also Expresses Interest
GameStop Stock Experiences Dizzying Volatility

[Asia Economy New York=Correspondent Baek Jong-min] Political criticism is pouring in as Robinhood, a stock trading app used by individual investors in the U.S., halted trading of stocks like GameStop and AMC, whose prices surged sharply.

While individual trading was restricted, hedge fund short selling was still allowed, prompting politicians across party lines and ideological spectrums to express unified outrage. There is also growing speculation that this incident could accelerate reforms in trading practices centered around large Wall Street financial firms.

Alexandria Ocasio-Cortez, a leading progressive figure within the Democratic Party, tweeted on the 28th (local time), "This is unacceptable. Hedge funds are freely trading as they wish while Robinhood blocked individual investors' trades. As a member of the House Financial Services Committee, I will support hearings if necessary."

Ocasio-Cortez went a step further by announcing that she would discuss this issue on Twitch, an internet personal broadcasting service dedicated to video games, that evening. She is also known as a 'game enthusiast' who has incorporated gaming into her legislative activities.

Elon Musk, CEO of Tesla, expressed agreement with Ocasio-Cortez’s tweet, responding with "absolutely."

Robinhood halted trading of stocks mentioned on Reddit’s 'WallStreetBets' internet community starting that day, following expressions of concern from the White House and the U.S. Securities and Exchange Commission (SEC) about the sharp rise in GameStop’s stock price the day before.

According to U.S. media, about half of Robinhood users hold GameStop shares but found themselves unable to sell or buy more. TD Ameritrade has also blocked trading of these stocks.

Republican Senator Ted Cruz also voiced full agreement with Ocasio-Cortez’s claims. Democratic Representative Ro Khanna joined the chorus of criticism against restrictions on individual investors’ trading. He stated, "An investigation is needed into who influenced the trading restrictions. We also need to reconsider taxation on hedge fund short selling and SEC’s regulations on short selling."

House Speaker Nancy Pelosi, the top Democrat in Congress, said at a press conference that day, "The Biden administration is closely monitoring this situation. Congress will also participate in investigating GameStop stock." She expressed interest in the trading halts imposed on individuals, calling it "interesting."

[Image source=AP Yonhap News]

Hedge fund magnate Mark Cuban and Dave Portnoy, who has emerged as a symbol of individual day traders since last year, strongly criticized Robinhood’s trading restrictions.

As the situation escalated, Robinhood issued a statement emphasizing the legitimacy of its actions, saying, "Providing information to customers is more important than ever amid extreme market volatility."

The U.S. securities authorities are also deeply considering the situation. The market expects the authorities to focus more on the possibility of stock price manipulation rather than trading restrictions.

Daniel Hawk, who was in charge of market surveillance at the SEC, told the Wall Street Journal (WSJ), "The fact that stock purchases are being encouraged through social networks provides the authorities with an easier situation to investigate and respond." WSJ reported that market insiders are urging the SEC to investigate Reddit users.

Meanwhile, GameStop’s stock price continued to experience dizzying volatility that day. The stock fluctuated wildly between $112 and $483 during trading hours. The day before, GameStop’s stock rose 134%, closing at $341.

AMC, a theater chain that had seen a 300% price increase the previous day, was down 50%. BlackBerry fell 38%, and Bed Bath & Beyond dropped 34%.

Individual investors also pushed up American Airlines’ stock price that day. American Airlines showed a better-than-expected performance in its announced earnings, resulting in an early trading surge of up to 50%. U.S. media attributed this to individual investors buying stocks with heavy short selling.