Thursday, January 28, 2021

Rashida Tlaib blasts Robinhood app for protecting rich hedge fund investors in GameStop stock drama

Posted By on Thu, Jan 28, 2021 at 2:58 PM

click to enlarge Rep. Rashida Tlaib. - PHIL PASQUINI / SHUTTERSTOCK.COM
  • Phil Pasquini /
  • Rep. Rashida Tlaib.

By know you've probably heard of the drama surrounding the stock market, in which an army of amateur investors from Reddit's WallStreetBets board banded together to massively inflate stocks as a way to stick it to rich hedge fund short-sellers who were betting on them to fail.

We're no financial experts — hence why we wound up in the field of journalism — but The New York Times has perhaps the best explainer so far to help catch you up to speed (at least until filmmaker Adam McKay gets Margot Robbie to explain it while taking a bubble bath). Basically, as the stock goes up, short-sellers are forced to buy more shares, which can make the price go up even more, putting the squeeze on the short-sellers.

Ironically, the drama centers around GameStop, the strip mall video game reseller — highlighting just how much the stock market is actually itself just a giant video game. But the irony doesn't end there.

On Thursday, in response to the stock market volatility, the stock-trading app Robinhood said it was "restricting transactions for certain securities to position closing only" — in other words, people could only use the app to sell shares, but not to buy them, effectively shutting the amateur investors out.

Yes, the app named after the folkloric hero who famously stole from the rich to give to the poor made a move to protect the rich hedge fund investors and fuck over the little Redditors.

As Robinhood's website proudly boasts, "We’re on a mission to democratize finance for all."

So much for that.

U.S. Rep. Rashida Tlaib, who could very well be considered Detroit's modern-day Robin Hood, blasted the company on Twitter.

"This is beyond absurd," she wrote, calling on the House Committee on Financial Services to hold a hearing on Robinhood's apparent market manipulation. "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," she added.

Tlaib's colleague, U.S. Rep. Alexandria Ocasio-Cortez, said she would use her seat on the House Financial Services committee to support a hearing. "This is unacceptable," she wrote. "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."

On Wednesday, GameStop was trading at $347.51 a share, a massive jump from $20 per share last year. According to The Wall Street Journal, the Redditor's gambit worked, forcing short-seller hedge funds to inject massive amounts of money into the stocks.

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