Billionaire Elon Musk has joined the growing number of public figures supporting United States Representative Alexandria Ocasio-Cortez's rallying cry against the stock trading application Robinhood.
On January 28, Musk tweeted his approval after Ocasio-Cortez, called by many as AOC, sought a US House of Representatives’ Financial Services Committee hearing on Robinhood’s decision to halt trading of the GameStop stock.
“This is unacceptable. 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. As a member of the Financial Services Cmte, I’d support a hearing if necessary (sic),” Ocasio-Cortez said in a tweet.
“Inquiries into freezes should not be limited solely to Robinhood. This is a serious matter. Committee investigators should examine any retail services freezing stock purchases in the course of potential investigations - especially those allowing sales, but freezing purchases,” she added in another tweet.
Musk responded to AOC’s tweet with just a word – “absolutely”.
Robinhood, among some other trading platforms, abruptly blocked clients from purchasing shares of some companies whose stock prices spiked dramatically. This came a day after shares of GameStop – an American gaming merchandise retailer – rose 135 percent.
Some day traders got together on social news aggregation website Reddit and bought shares and options in large numbers. The online day traders were reportedly hoping to challenge Wall Street’s dominance.
The subsequent rally negatively impacted hedge funds who had heavily shorted these stocks.
Robinhood’s clamp down led to GameStop’s shares plummeting 75 percent in 90 minutes. Robinhood said that the additional restrictions on trades of GameStop, among other companies, were necessary to ensure it did not run afoul of government regulations.Also read: Trading curbs reverse GameStop rally, angering upstart traders