9 Days After Purchase Ban
GameStop Down 84% This Week Alone
[Asia Economy Reporter Kim Suhwan] The U.S. online stock trading platform Robinhood has lifted the purchase limits on GameStop and AMC stocks.
According to Bloomberg and other foreign media on the 4th (local time), Robinhood abolished the trading limits on GameStop and AMC stocks starting that day. This move came just nine days after it completely banned purchases of these two stocks on the 28th of last month. While the purchase limits had been gradually eased from 1 share to 4 shares, then to 20 shares, the limits were completely removed starting that day.
During the GameStop incident last month, known as the "retaliation of individual investors," Robinhood halted trading by individual investors on stocks mentioned in the Reddit internet community "WallStreetBets." In response, hedge funds dumped sell orders on specific stocks such as GameStop and AMC, causing stock prices to plummet, which angered individual investors. Some investors even filed class-action lawsuits against Robinhood.
Furthermore, after Robinhood secured a total investment of $3.4 billion (approximately 3.8 trillion KRW) from existing shareholders including hedge funds, suspicions arose among individual investors that the purchase restrictions were imposed in exchange for funding from hedge funds.
Robinhood CEO Vlad Tenev said in an interview with USA Today on the 31st of last month, "Our mission is to provide financial services for individual investors," adding, "We help millions of citizens marginalized within the U.S. financial system." This statement is interpreted as an attempt to show that Robinhood does not represent hedge funds amid criticism from individual investors that the purchase limit restrictions sacrificed them to offset hedge fund losses.
As the situation worsened and political circles became involved, the controversy grew further. On the 2nd, Senator Elizabeth Warren, known as the "Grim Reaper of Wall Street," sent a letter to CEO Tenev demanding an explanation for the trading restrictions and announced plans to take measures to protect individual investors. Representative Alexandria Ocasio-Cortez also hinted at holding a hearing via Twitter, stating, "This is unacceptable."
On the same day, U.S. Treasury Secretary Janet Yellen convened a meeting to respond to the sharp fluctuations in GameStop's stock price, discussing the price volatility during the GameStop incident and issues such as Robinhood app's stock purchase restrictions. Secretary Yellen said at the meeting, "Maintaining a fair market and protecting investors is the most important," and added, "We are closely monitoring the GameStop incident."
Meanwhile, GameStop and AMC stocks plunged 84% and 47%, respectively, just this week.
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