Rep. Ro Khanna (D-CA) on Thursday called on Congress to investigate Robinhood’s decision to restrict purchases of GameStop shares after Reddit users sent the stock soaring this week.
“We need an investigation into RobinhoodApp’s decision and who influenced that,” Khanna wrote on Twitter. “And this shows the need for a financial transaction tax on hedge fund shorting and SEC regulations on short selling practices.”
Yes @aoc. We need an investigation into RobinhoodApp’s decision and who influenced that. And this shows the need for a financial transaction tax on hedge fund shorting and SEC regulations on short selling practices. https://t.co/mYX8Ab3JwH
— Ro Khanna (@RoKhanna) January 28, 2021
Khanna’s comment came in response to Rep. Alexandria Ocasio-Cortez (D-NY) expressing support for the House Committee on Financial Services to hold a hearing on Robinhood’s actions.
“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,” Ocasio-Cortez tweeted.
Additionally, Senate Republicans such as Ted Cruz (TX) and Mike Lee (UT) also signaled their support in getting to the bottom of Robinhood’s stock trading restrictions.
“We should investigate,” Lee said.
Fully agree. 👇 https://t.co/rW38zfLYGh
— Ted Cruz (@tedcruz) January 28, 2021
We should investigate. https://t.co/1CRvL4fLs5
— Mike Lee (@SenMikeLee) January 28, 2021
Robinhood and other retail brokerages are taking steps to tamp down the speculative frenzy surrounding companies such as GameStop, but the actions only sparked more volatility and an outcry from users of the platforms and some members of Congress that small investors are being treated unfairly.
GameStop stock has rocketed from below $20 earlier to close around $350 Wednesday as a volunteer army of investors on social media challenged big institutions who had placed market bets that the stock would fall.
The action was even wilder Thursday: The stock swung between $112 and $483. At midday it was down 27% at $255.
Robinhood said Thursday investors would only be able to sell their positions and not open new ones in some cases, and Robinhood will try to slow the amount of trading using borrowed money.
The Associated Press contributed to this report.