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Robinhood: The trading app co-founded by Indian-American caught in GameStop storm

Co-founded by Baiju Bhatt, Robinhood is facing calls for a probe from Elon Musk and others for halting trade in GameStop that set off howls of protest from small traders.

January 29, 2021 / 01:15 PM IST
File image: Robinhood app's loco on a smartphone. (Image: AP Photo/Patrick Sison)

File image: Robinhood app's loco on a smartphone. (Image: AP Photo/Patrick Sison)

Robinhood, a stock-trading application, is in the thick of the GameShop controversy after it abruptly blocked clients from purchasing shares of some companies whose stock prices had spiked dramatically and shaken up Wall Street.

This came a day after GameStop’s share price increased 135 percent. Some day traders had gotten together on social news aggregation website Reddit and bought shares and options in large numbers. The online day traders hoped to challenge Wall Street’s dominance. The subsequent rally in the struggling video game retailer's stock and others hit hedge funds, which had heavily shorted these shares, hard.

The new limits on trading introduced by Robinhood and other online platforms set off howls of protest among small traders, whose numbers have multiplied especially during lockdown. These investors complained that the platforms that "democratised" trading were now assisting Wall Street, which they blame for recession, excesses and getting bailed out through taxpayers' money.

Also read: Zerodha CEO Nithin Kamath on GameStop, short squeeze and why Indian investors have nothing to fear