Stock trading company Robinhood had a disappointing initial public offering on Wall Street.
On Thursday, the company began offering its stock — trading under the ticker “<a href="https://finance.yahoo.com/quote/HOOD/">HOOD</a>” — at $38 per share. By market close, the price had dropped 8% to $34.82; on Friday afternoon, shares were trading at roughly $36.25.
CNN Business reports that the average company witnesses its stock price rise by 33% during its first day of trading; only one-quarter of American IPOs see decreases in prices.
An initial public offering — usually abbreviated as “IPO” and colloquially referred to as “going public” — is a private company’s first attempt to fundraise by selling its shares on a stock exchange.
<a href="https://www.cnn.com/2021/07/29/investing/robinhood-stock-value-ipo/index.html">CNN Business</a> adds that despite its lackluster first day, investors are optimistic about Robinhood’s future:
<blockquote>At the IPO price, the deal values Robinhood at about 21 times trailing revenue, according to Renaissance Capital. That compares a multiple of just five for Charles Schwab, a rival that is expanding at a slower pace.</blockquote>
Robinhood also offered its first shares to its own users:
<blockquote>Robinhood completely disrupted the online brokerage industry by pioneering zero-commission trading. As the company lured new and existing investors to its platform, rivals were forced to eliminate trading fees and join forces just to survive.
Now Robinhood is disrupting the IPO process. The company is allowing its users to buy a chunk — as much as one-third — of its IPO shares before they begin trading on the Nasdaq. Normally, only corporate insiders and powerful institutions can get access to these coveted shares.</blockquote>
Founded by Stanford students Vlad Tenev and Baiju Bhatt, Robinhood has a mission of creating an approachable investment platform that permits novice investors to safely purchase assets. However, the firm faced backlash earlier this year after it barred users from buying shares of GameStop — which was exploding in price amid a coordinated effort from amateur traders communicating via social media.
“We absolutely did not do this at the direction of any market maker or hedge fund or anyone we route to or other market participants,” Tenev <a href="https://www.dailywire.com/news/breaking-robinhood-ceos-interview-with-cnbc">explained</a> during a CNBC interview. “The reason we did it was because Robinhood is a brokerage firm; we have lots of financial requirements including SEC net capital requirements and clearinghouse deposits. So that’s money that we have to deposit at various clearinghouses. So some of these requirements fluctuate quite a bit based on volatility in the markets, and they can be substantial in the current environment where there’s a lot of volatility and a lot of concentrated activity in these names that have been going viral on social media.”

Robinhood Markets IPO Listing Day

Robinhood Debut On Wall Street Was A Massive Disappointment

Robinhood

Wall Street

Alex Kearns was still in high school when he began using the stock-trading app Robinhood to make investments. He started buying and selling stocks with his own savings from birthday gifts and his summer job – a total of about $5,000, his father <a href="https://www.cbsnews.com/amp/news/alex-kearns-robinhood-trader-suicide-wrongful-death-suit/">told</a> CBS News.
His parents, Dan and Dorothy, said they spoke to Alex about responsible investing, believing he had “limited exposure” to the risks of stock-market trading. Robinhood, however, makes it incredibly easy for users to buy and sell options, a riskier investment. CBS determined that all a user has to do to be approved by Robinhood to buy and sell options is to check that they at least have “not much” experience in trading. That’s it.
&#8220;I don&#8217;t understand how they allowed that to happen in the first place,&#8221; Dan told the outlet.
On June 11, 2020, Alex looked at his Robinhood account and discovered it was restricted and showed an apparent negative balance of $730,000. Early the next morning, at 3:26 a.m., the company sent Alex an automated message saying the now-20-year-old needed to take “immediate action” and pay more than $170,000 in the next few days.
&#8220;He thought he blew up his life. He thought he screwed up beyond repair,&#8221; Dan told CBS.
Panicked, Alex tried to contact someone at Robinhood, but since there was no customer service phone number, he sent three emails to its support account, trying to understand what had happened.
&#8220;I was incorrectly assigned more money than I should have, my bought puts should have covered the puts I sold. Could someone please look into this?&#8221; Alex wrote in the emails, according to CBS.
He received an automated message in response saying, “Thanks for reaching out to our support team!&#8221; It added: “We wanted to let you know that we&#8217;re working to get back to you as soon as possible, but that our response time to you may be delayed.&#8221;
Later that day, Alex committed suicide. He left behind a note to his parents that asked “How was a 20-year-old with no income able to get assigned almost $1 million worth of leverage?&#8221;
&#8220;The puts I bought/sold should have cancelled out, too, but I also have no clue what I was doing now in hindsight. There was no intention to be assigned this much and take this much risk, and I only thought that I was risking the money that I actually owned. If you check the app, the margin investing option isn&#8217;t even &#8216;turned on&#8217; for me. A painful lesson. F*** Robinhood,&#8221; he added.
One day after Alex’s suicide, Robinhood sent another automated email, which seemed to indicate the issue was fixed and that Alex didn’t owe money.
&#8220;Great news!&#8221; The email read, according to a copy obtained by CBS, &#8220;We&#8217;re reaching out to confirm that you&#8217;ve met your margin call and we&#8217;ve lifted your trade restrictions. If you have any questions about your margin call, please feel free to reach out. We&#8217;re happy to help!&#8221;
Alex’s parents are suing the company for “wrongful death, negligent infliction of emotional distress and unfair business practices,” CBS reported.

He Thought He Lost $730,000 On Robinhood And Killed Himself. Now His Parents Are Suing.

Lawsuit

Readers Pass

Suicide

It&#8217;s hard to believe that Jon Stewart, the former host of &#8220;The Daily Show,&#8221; had avoided Twitter all this time. Alas, there&#8217;s a first time for everything.
Over the weekend, the political comedian joined the social media giant and torched the trading app Robinhood after it implemented a trade freeze on the surging GameStop (GME) stock that the Reddit group WallStreetBets pushed in an attempt to &#8220;squeeze&#8221; big hedge fund mangers who were short-selling the stock.
&#8220;This is bulls**t. The Redditors aren&#8217;t cheating, they&#8217;re joining a party Wall Street insiders have been enjoying for years. Don&#8217;t shut them down&#8230;maybe sue them for copyright infringement instead!! We&#8217;ve learned nothing from 2008,&#8221; tweeted Stewart first.
[Warning: Strong Language]
<blockquote class="twitter-tweet" data-width="500" data-dnt="true">
This is bullshit. The Redditors aren&#39;t cheating, they&#39;re joining a party Wall Street insiders have been enjoying for years. Don&#39;t shut them down&#8230;maybe sue them for copyright infringement instead!! We&#39;ve learned nothing from 2008. Love StewBeef
&mdash; Jon Stewart (@jonstewart) <a href="https://twitter.com/jonstewart/status/1354901018564321287?ref_src=twsrc%5Etfw">January 28, 2021</a></blockquote>
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After a warm welcome from his newfound followers, who quickly swelled to one million, Stewart then joked about becoming president if he excels on the platform.
&#8220;So&#8230;if I do really well on here I get to be President, yes?&#8221; he tweeted.
<blockquote class="twitter-tweet" data-width="500" data-dnt="true">
So&#8230;if I do really well on here I get to be President, yes?
&mdash; Jon Stewart (@jonstewart) <a href="https://twitter.com/jonstewart/status/1355276142262050817?ref_src=twsrc%5Etfw">January 29, 2021</a></blockquote>
<script async src="https://platform.twitter.com/widgets.js" charset="utf-8"></script>
Jon Stewart joining in the hit against Robinhood and the championing of WallStreetBets represents yet another example of the bizarre coalition of diverging political opinions that seem to have united in the wake of the GameStopSurge, which has seen the likes of billionaire Mark Cuban, Donald Trump Jr., Rep. Alexandria Ocasio-Cortez (D-NY), and Sen. Ted Cruz (R-TX) all agreeing with each other.
“I got to say I LOVE LOVE what is going on with #wallstreetbets. All of those years of High Frequency Traders front running retail traders, now speed and density of information and retail trading is giving the little guy an edge. Even my 11 yr old traded w them and made $,” tweeted Mark Cuban.
<blockquote class="twitter-tweet" data-width="500" data-dnt="true">
I got to say I LOVE LOVE what is going on with <a href="https://twitter.com/hashtag/wallstreetbets?src=hash&amp;ref_src=twsrc%5Etfw">#wallstreetbets</a>. All of those years of High Frequency Traders front running retail traders,now speed and density of information and retail trading is giving the little guy an edge. Even my 11 yr old traded w them and made $
&mdash; Mark Cuban (@mcuban) <a href="https://twitter.com/mcuban/status/1354613692239925249?ref_src=twsrc%5Etfw">January 28, 2021</a></blockquote>
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“This is unacceptable,&#8221; tweeted AOC after Robinhood initiated the freeze. &#8220;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.&#8221;
“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.
&#8220;Fully agree,&#8221; Cruz said in response to AOC.
<blockquote class="twitter-tweet" data-width="500" data-dnt="true">
Fully agree. 👇 <a href="https://t.co/rW38zfLYGh">https://t.co/rW38zfLYGh</a>
&mdash; Ted Cruz (@tedcruz) <a href="https://twitter.com/tedcruz/status/1354833603943931905?ref_src=twsrc%5Etfw">January 28, 2021</a></blockquote>
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“It took less than a day for big tech, big government and the corporate media to spring into action and begin colluding to protect their hedge fund buddies on Wall Street. This is what a rigged system looks like, folks! #RobinHood #RedditArmy #GME #GMEtothemoon<a class="css-4rbku5 css-18t94o4 css-901oao css-16my406 r-1n1174f r-1loqt21 r-poiln3 r-bcqeeo r-qvutc0" role="link" href="https://twitter.com/hashtag/GMEtothemoon?src=hashtag_click" data-focusable="true">,</a>” tweeted Don Jr.
The former president’s son also shared a post from Barstool CEO Dave Portnoy, who tweeted: “Somebody is going to have to explain to me in what world RobinhoodApp and others literally trying to force a crash by closing the open market is fair? They should all be in jail.”
“If they take down WallStreetBets, they better take down every single Wall Street hedge fund that has been endlessly using gangster tactics to make a quick buck,” the WallStreetBets chairman tweeted.
“He’s not wrong… they just aggregated enough small retail investors in an open forum to move markets just like the big guys. It’s actually amazing to watch!!!” responded Don Jr.
<blockquote class="twitter-tweet" data-width="500" data-dnt="true">
It took less than a day for big tech, big government and the corporate media to spring into action and begin colluding to protect their hedge fund buddies on Wall Street. This is what a rigged system looks like, folks! <a href="https://twitter.com/hashtag/RobinHood?src=hash&amp;ref_src=twsrc%5Etfw">#RobinHood</a> <a href="https://twitter.com/hashtag/RedditArmy?src=hash&amp;ref_src=twsrc%5Etfw">#RedditArmy</a> <a href="https://twitter.com/hashtag/GME?src=hash&amp;ref_src=twsrc%5Etfw">#GME</a> <a href="https://twitter.com/hashtag/GMEtothemoon?src=hash&amp;ref_src=twsrc%5Etfw">#GMEtothemoon</a> <a href="https://t.co/UhrwGHCjng">https://t.co/UhrwGHCjng</a>
&mdash; Donald Trump Jr. (@DonaldJTrumpJr) <a href="https://twitter.com/DonaldJTrumpJr/status/1354793103090212865?ref_src=twsrc%5Etfw">January 28, 2021</a></blockquote>
<script async src="https://platform.twitter.com/widgets.js" charset="utf-8"></script>
<blockquote class="twitter-tweet" data-width="500" data-dnt="true">
He’s not wrong&#8230; they just aggregated enough small retail investors in an open forum to move markets just like the big guys. It’s actually amazing to watch!!! <a href="https://twitter.com/hashtag/GME?src=hash&amp;ref_src=twsrc%5Etfw">#GME</a> <a href="https://twitter.com/hashtag/GMEtothemoon?src=hash&amp;ref_src=twsrc%5Etfw">#GMEtothemoon</a> <a href="https://t.co/kfs9mZy9QI">https://t.co/kfs9mZy9QI</a>
&mdash; Donald Trump Jr. (@DonaldJTrumpJr) <a href="https://twitter.com/DonaldJTrumpJr/status/1354643375610322945?ref_src=twsrc%5Etfw">January 28, 2021</a></blockquote>
<script async src="https://platform.twitter.com/widgets.js" charset="utf-8"></script>
Related: <a href="https://www.dailywire.com/news/aoc-don-jr-ted-cruz-all-rip-robinhood-for-halting-gamestop-trading">AOC, Don Jr., Ted Cruz All Rip Robinhood For Halting GameStop Trading: ‘Unacceptable’</a>

House Moderates To Release Bipartisan Stimulus Compromise

Jon Stewart Joins Twitter, Denounces Robinhood

Jon Stewart

Twitter

You may not know the name, but you know his moniker: The Wolf of Wall Street.
Jordan Belfort, the former stockbroker and convicted felon made even more famous by the 2013 Leonardo DiCaprio film, weighed in Saturday on the GameStop-WallStreetBets-Robinhood saga.
&#8220;It’s about time that the little guy gave it to Wall Street. It’s so gratifying to see. I’m still in shock of it actually happening,&#8221; Belfort said.
In an <a href="https://www.foxnews.com/media/jordan-belfort-wolf-of-wall-street-on-little-guy-stock-wins-its-about-time">appearance</a> on “Watters’ World” on Fox News, host Jesse Watters said moves by Wall Street conglomerates to pressure retail trading platforms like Robinhood to stop trading on stocks like GameStop was likely illegal.
&#8220;I think it goes beyond that,&#8221; Belfort said. &#8220;When I first saw it happen … when I really investigated what happened,&#8221; he said, &#8220;they broke a tremendous amount of laws …”
&#8220;I think Robinhood’s out of business because the amount of lawsuits they’re gonna get right now, from every single person on both sides of it … They’ll say, ‘Wait, I couldn’t buy &#8230; what I wanted to buy,’ or ‘I was forced to sell’ — They’re done, Robinhood.&#8221;
&#8220;Someone needs to go to jail, it’s true,&#8221; he added. &#8220;At first I wasn’t that upset, but last night I saw that the shorts were still short.&#8221;
A throng of Average Joes driven by a Reddit poster started buying up GameStop shares as big brokers were shorting them, which thrust hedge funds billions of dollars into the red and propped up a failing video game company well beyond its actual value. Sites like Robinhood eventually halted the sale of Gamestop shares.
&#8220;They shut down these platforms for the little guy like the way Parler got shut down,&#8221; he said, comparing the situation to that of Parler, a social media platform essentially shut down by Amazon.
&#8220;Now, how about this one?&#8221; Belfort said. &#8220;Google eliminated 100,000 negative reviews off of Robinhood. … I can’t believe the things that are being allowed to happen right now and it’s almost like Big Tech has impunity, Wall Street has had impunity. &#8230; Until someone goes to jail for this, it’s gonna keep happening again and again.&#8221;
But Belfort warned investors. &#8220;Please be careful,&#8221; he said, &#8220;because at a certain point in time the party’s gonna end for these stocks and they’re gonna drop precipitously — and unless you’re careful you’re gonna lose a ton of money.&#8221;
The Gamestop stock price skyrocketed by around 8,000% from six months ago. Big brokers, hedge funds, and professional investors were short-selling, which means they borrowed shares of stock to sell and planned to buy them back later so they could return them, letting them pocket the profit if the stock price went down.
&#8220;Because short sellers — frequently hedge funds — in essence are betting against a company&#8217;s success, it can be a risky position,&#8221; NBC <a href="https://www.nbcnews.com/business/business-news/gamestop-reddit-explainer-what-s-happening-stock-market-n1255922">explained</a>. &#8220;Any positive news or enthusiasm for the stock will push up the stock&#8217;s valuation, minimizing profit for the short seller. In the case of GameStop, chatter on massive online trading forums invigorated interest in buying the stock, pushing up the price, which in turn fueled more interest.&#8221;
&#8220;The speculative trading left short sellers with no more shares to buy to cover their positions, creating a short squeeze and leaving them with millions of dollars in stocks they had bought at a high price but which they then had to offload at an even higher price,&#8221; NBC said.
Related: <a href="https://www.dailywire.com/news/reddits-wall-street-bets-and-elon-musk-fuel-gamestops-stock-surge">Reddit’s ‘Wall Street Bets’ And Elon Musk Fuel GameStop’s Stock Surge</a>

Jordan Belfort Speaks At The Gold Coast Convention Centre

‘Wolf Of Wall Street’ Jordan Belfort On ‘Little Guy’ Stock Win: ‘It’s About Time’

Stock Market

One of the attributes of the American dream is that the little guy can become the big guy. Or rather, through the creative destruction of the free-enterprise system, a small entrepreneur may destabilize and replace a larger competitor through innovation, cost savings and better ideas.
American history is full of stories of small entrepreneurs with good ideas displacing preexisting giants in the marketplace. Over time, however, that has become less the case. Now Goliath hires an army of lobbyists who help shape the regulatory code and the tax code and draft legislation to provide competitive advantages for themselves or disadvantages for would-be competitors.
The little guy cannot become the big guy, because the big guy has lobbyists. It is no coincidence that Democrats are decrying the wealth gap and the inability of the little guy to become the big guy at a time the big guy is engaged in shaping federal policy and funding the Democrats. The Democrats&#8217; solution is to make the little guy more comfortable but also punish him if he dares to get too successful. The Republican solution has largely been to prop up the big guys and bail them out when they falter, equally ensuring there can be no competition.
Whether it is the 2008 financial crisis or now, the government has created more moral hazard in the economy by bailing out and propping up a lot of financial institutions and other companies that should be wiped out in the creative destruction of the free market. A correction is coming, if only because the government has intervened so often to prop up so many that should be dead or left to die.
Likewise, major corporate Goliaths are now advocating government policies that stifle the David competitors. Amazon can embrace a $15 minimum wage and major online retailers can support an internet sales tax because they are billion-dollar companies. The would-be competitor does not have that money.
Along comes the GameStop saga. First, let me explain at a very basic level what short selling is.
Short selling is when someone or some entity borrows stock, not money, from a brokerage. The short seller thinks the stock is going to go down. So, Short Seller X borrows 10 shares of Company A from Brokerage for 30 days. X then sells the stock at $100 and pockets $1,000. Within 30 days, the stock has fallen to $50 a share. X then buys back the shares at $50 and returns the shares to Brokerage, and X has profited $500.
Hedge funds love to do it. Along comes a hedge fund that sees GameStop and thinks GameStop stock is going to go down. So, the hedge fund borrowed shares and sold the shares, and the public got wind of it.
A group of day-trading gamblers on Reddit operating under a subreddit called WallStreetBets decided to buy up GameStop, which would force the hedge fund to buy even more before the price got too high, in order to minimize its losses.
In doing so, both the financial press and many regulators treated the &#8220;redditors&#8221; as the bad guys. Robinhood, a popular trading app backed by major Wall Street financiers, stopped allowing people to buy GameStop and other stocks involved. CNBC hosts and guests excoriated the regular stock traders having the audacity to drive up a stock price and hurt a hedge fund. Goliath, yet again, had the elite rally to protect him from David.
If the system always protects Goliath, then at some point, David is going to try to not just slay Goliath but also burn the system down. The system turning on the regular guy pushes the regular guy to find their own Goliath, which may look like Trump 2024.
David does not need big government, a social safety net or a nanny state. He needs rocks, and he&#8217;s starting to throw them at whichever party tries to protect Goliath. Yes, people will lose money. Some people may be financially ruined. But risk-taking by regular Americans is essential to the American dream. David must be allowed to slay Goliath.
The views expressed in this piece are the author’s own and do not necessarily represent those of The Daily Wire.
To find out more about Erick Erickson and read features by other Creators Syndicate writers and cartoonists, visit the Creators Syndicate webpage at www.creators.com.

ERICKSON: Let David Slay Goliath

Big Tech struck back with a vengeance this week against the Redditers who pushed the GameStop stock surge, causing billions of dollars in losses for hedge fund short sellers.
Shortly after the stock trading app Robinhood froze all GameStop (GME) trading, Google removed close to 100,000 negative reviews from the Google Play Store that brought Robinhood down to a 1-star rating.
&#8220;Google is actively removing negative reviews of the Robinhood app from the Google Play Store,&#8221; The Verge <a href="https://www.theverge.com/2021/1/28/22255245/google-deleting-bad-robinhood-reviews-play-store">reported</a>. &#8220;After some disgruntled Robinhood users <a href="https://www.reddit.com/r/wallstreetbets/comments/l7001b/do_your_part_tank_robinhoods_rating_in_the_app/">organized</a> <a href="https://twitter.com/hamiolhs/status/1354789899510149125?s=21">campaigns</a> to give the app a one-star review on Google’s Play Store and Apple’s App Store — and succeeded in review-bombing it all the way down to a one-star rating — the company has now deleted enough reviews to bring it back up to nearly four stars.&#8221;
<figure class="e-image"></figure>
&#8220;It’s not outside Google’s purview to delete these posts. Google’s policies <a href="https://play.google.com/about/comment-posting-policy/" target="_blank" rel="nofollow noopener noskim noreferrer" data-bamx-link="ejod4xym4qb" data-bamx-auction-start="Thu Jan 28 2021 23:42:56 GMT-0800 (Pacific Standard Time)" data-bamx-auction="{&quot;auction_result&quot;:{&quot;id&quot;:&quot;1730771077702427444&quot;,&quot;auction_id&quot;:&quot;1730743096111793567&quot;,&quot;tracker_urls&quot;:{&quot;bam_box_impression&quot;:[],&quot;bam_box_viewable_impression&quot;:[],&quot;impression&quot;:[],&quot;viewable_impression&quot;:[]},&quot;redirect_url&quot;:&quot;https://api.narrativ.com/api/v0/redirect/?url=https%3A%2F%2Fplay.google.com%2Fabout%2Fcomment-posting-policy%2F&amp;a=1730743096111793567&amp;uuid=898682b5-c5c1-470d-9d67-6c383a6408e6&amp;uid_bam=1730771076371389526&amp;ar=1730771077702427444&quot;,&quot;product&quot;:null,&quot;u1&quot;:null},&quot;impression_pixel_url&quot;:null}" data-bamx-auction-end="Thu Jan 28 2021 23:42:56 GMT-0800 (Pacific Standard Time)">explicitly prohibit</a> reviews intended to manipulate an app’s rating, and the company says <a href="https://android-developers.googleblog.com/2018/12/in-reviews-we-trust-making-google-play.html">it has a system</a> that &#8216;combines human intelligence with machine learning to detect and enforce policy violations in ratings and reviews,'&#8221; the report continued.
Google said it felt confident that the negative reviews, which came in direct response to Robinhood shutting its customers out, were in violation of the company&#8217;s policy. The temperature swelled to such sweltering levels on Thursday that a class-action <a href="https://www.reddit.com/r/wallstreetbets/comments/l6x130/class_action_against_robinhood_allowing_people_to/">lawsuit</a> was filed against the trading app over alleged market manipulation.
“On or about January 27, 2021 Robinhood, in order to slow the growth of GME and deprived their customers of the ability to use their service, abruptly, purposefully, willfully, and knowingly pulled GME from their app,” the lawsuit said. “Meaning, retail investors could no longer buy or even search for GME on Robinhood’s app.”
Jeff Erez, a Miami lawyer who has represented clients against Robinhood before, told <a href="https://www.bloomberg.com/news/articles/2021-01-28/robinhood-customers-sue-over-removal-of-gamestop" target="_blank" rel="noopener noreferrer">Bloomberg</a> that the lawsuit will likely fail, given that Robinhood&#8217;s contract expressly states they can halt trading at any time.
“I’m looking at <a title="Click to view webpage." href="https://cdn.robinhood.com/assets/robinhood/legal/Robinhood%20Customer%20Agreement%20(June%2022)%20(1).pdf" target="_blank" rel="nofollow noopener noreferrer">the Robinhood contract</a>, and it says in black-and-white they can block or restrict trades at any time. I’m not aware of any law that would guarantee you a right to purchase a certain security at a certain brokerage firm,&#8221; said Erez.
Speaking with CNBC on Thursday, Robinhood CEO Vlad Tenev said that the GameStop stock freeze was not “at the direction of any marketmaker or hedge fund or anyone we route to or other market participants.”
&#8220;We had to make a very difficult decision. It’s been a challenging day,&#8221;<a href="https://www.dailywire.com/news/breaking-robinhood-ceos-interview-with-cnbc"> said Tenev</a>. &#8220;We made the decision in the morning to limit the buying of about 13 securities on our platform. So to be clear, customers could still sell those securities if they had positions in them, and they could also trade in the thousands of other securities on our platform. So it was a difficult decision, and that’s what we had to do as part of normal operations.&#8221;
Related: <a href="https://www.dailywire.com/news/lawsuits-filed-against-robinhood-after-restricting-trades-gamestop-stock">Lawsuits Filed Against Robinhood After Restricting Trades Of Shorted Stocks</a>

Robinhood Pays $65 Million To End A Key Probe, But Others Fester

Big Tech Mania: Google Regulates Thousands Of Negative Robinhood Reviews After GameStop Trade Freeze

Big Tech

Google

Speaking on CNBC with Andrew Sorkin, Robinhood CEO Vlad Tenev said that the decision to limit buying in GameStop (among other securities) was not “at the direction of any marketmaker or hedge fund or anyone we route to or other market participants.” He added that Robinhood did not have a liquidity problem.
Sorkin began by saying, “Explain what happened today.”
<blockquote>Tenev: Thank you for having me on the show again, Andrew. So what happened today, as you pointed out, we had to make a very difficult decision. It’s been a challenging day. We made the decision in the morning to limit the buying of about 13 securities on our platform. So to be clear, customers could still sell those securities if they had positions in them, and they could also trade in the thousands of other securities on our platform. So it was a difficult decision, and that’s what we had to do as part of normal operations.
Sorkin: But explain then, why did you do this? Did the SEC call you and tell you you had to do this? Was there a problem inside the company in terms of liquidity, in terms of the amount of deposits that you had to put in front to the exchanges? What led to this?
Tenev: Sure. And let me explain exactly how this works — oh, first of all, I want to address some of the misinformation that’s been out there ’cause there’s a lot of it. We absolutely did not do this at the direction of any marketmaker or hedge fund or anyone we route to or other market participants. The reason we did it was because Robinhood is a brokerage firm; we have lots of financial requirements including SEC net capital requirements and clearinghouse deposits. So that’s money that we have to deposit at various clearinghouses. So some of these requirements fluctuate quite a bit based on volatility in the markets, and they can be substantial in the current environment where there’s a lot of volatility and a lot of concentrated activity in these names that have been going viral on social media.
So we’re really in unprecedented times, and in order to protect the firm and protect our customers, we had to limit buying in these stocks. And to be absolutely clear, again —
Sorkin: But it sounds to me though, that you’re suggesting there was a liquidity problem inside the firm. And my question about that, then raises all sorts of new questions about whether there’s a systemic issue underneath the system and underneath the company unto itself.
Tenev: No, there’s no liquidity problem, and to be clear, this was done pre-emptively. So we did this proactively, and thousands of other securities remain tradeable on the platform. Customers that held these positions were able to sell them, and we’re doing what we can to allow buying and to remove these restrictions in the morning. But also, you might have seen, Robinhood has been the number one app in the app store overall. So we have seen unprecedented interest due to the fact that finance has been culturally [relevant] in a way that it hasn’t been before and these stocks are going viral on social media. And I think it’s really interesting to juxtapose against some of the other questions that we’ve been having before this. Of course Robinhood stands for everyday investors. From the very beginning, we have stood for investors, opening up access and giving them the ability to trade commission-free in whatever they want. And we’ve gotten a lot of criticism that maybe there should be more restrictions. So it pains us to have had to impose these restrictions, and we’re going to do what we can to enable trading in these stocks.
Sorkin: But what do you tell the Robinhood investor who says, &#8220;Look at the screen. I&#8217;m losing money. You are not allowing me to buy this, and by the way, I&#8217;m going to have to sell it for less money because of what you did.&#8221;
Tenev: Well, to be clear, we&#8217;re not allowing people to buy it, but they can sell positions that they have. I feel a little bit — I know how Clorox and Lysol felt in the pandemic when they were running out of hand sanitizer and supplies. We just haven&#8217;t seen this level of concentrated interest market-wide in a small number of names before so we understand our customers are upset. We&#8217;re doing what we can to re-enable buying in these names, and we stand with our customers, we stand for the everyday investor, and we do believe that you should be able to buy and sell the stocks that you want to, subject to all requirements, and that&#8217;s what we&#8217;re working day in and day out to make possible.
Sorkin: What do you say to the customer who says, &#8220;Look, maybe I shouldn&#8217;t be on Robinhood anymore. If they&#8217;re gonna not — if they&#8217;re gonna shut me out right when I need to be on the service, maybe I should go to alternative service.&#8221;
Tenev: Look, we realize customers are upset with this. It was not an easy decision. Ultimately, the team made the correct decision here, so what we can do is move forward, focus on giving customers the most stable and reliable platform going forward, and we&#8217;ve invested a lot in that and we&#8217;ve actually seen some great progress, and taking all the steps we can to make sure customers can buy securities that they want to buy without restrictions in the future.
Sorkin: When you look at the trading in these stocks over the past several days, do you think they&#8217;re divorced from reality? Are you concerned that the investors that are involved in this are doing these things for reasons that they fully understand and they fully understand the risks involved?
Tenev: I&#8217;m obviously a big believer in more education. I want to make sure that we give customers all the tools and educational resources that we can possibly give them. This is really about access, and access is something I&#8217;ve been super-strong about from the very beginning in the face of a lot of criticism and questions about whether we should be granting people access in the first place. So yes, I think people need to be informed, they need to be educated. We do want to give them the ability to do that, but I also believe that access is a very powerful thing. The more individual investors have access to the markets, the better off we will be, and we&#8217;re gonna work tirelessly, day in and day out to make sure customers have that access. It&#8217;s in the name; it&#8217;s everything we stand for.</blockquote>
<blockquote class="twitter-tweet" data-width="500" data-dnt="true">
Shorter <a href="https://twitter.com/hashtag/Robinhood?src=hash&amp;ref_src=twsrc%5Etfw">#Robinhood</a> CEO on CNBC: Hey, we still have thousands of other companies you can trade! And we&#39;re NUMBER ONE on app stores! Yay!
&quot;Of course, Robinhood stands for everyday investors. From the very beginning we have stood for investors, opening up access[.]&quot; <a href="https://t.co/9RaGbL5r9g">pic.twitter.com/9RaGbL5r9g</a>
&mdash; Curtis Houck (@CurtisHouck) <a href="https://twitter.com/CurtisHouck/status/1354944039066460163?ref_src=twsrc%5Etfw">January 29, 2021</a></blockquote>
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WOW.<a href="https://twitter.com/hashtag/Robinhood?src=hash&amp;ref_src=twsrc%5Etfw">#Robinhood</a>&#39;s CEO made things WORSE: &quot;We realize customers are upset with this. It was not an easy decision. Ultimately, the team made the correct decision here. So what we can do is move forward, focus on giving customers the most stable and reliable platform.&quot; <a href="https://t.co/afxeMXxQGI">pic.twitter.com/afxeMXxQGI</a>
&mdash; Curtis Houck (@CurtisHouck) <a href="https://twitter.com/CurtisHouck/status/1354945501058183175?ref_src=twsrc%5Etfw">January 29, 2021</a></blockquote>
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The interview continued below:
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Sorkin closes by asking what&#39;ll happen if the level of buying again pops up and they decided to act.<a href="https://twitter.com/hashtag/Robinhood?src=hash&amp;ref_src=twsrc%5Etfw">#Robinhood</a> CEO: &quot;We&#39;re doing a lot of things we want to obviously allow buying safely for the firm and for the customers&#8230;We should have been out there a little bit sooner.&quot; <a href="https://t.co/UybH1Lv30c">pic.twitter.com/UybH1Lv30c</a>
&mdash; Curtis Houck (@CurtisHouck) <a href="https://twitter.com/CurtisHouck/status/1354949397294047236?ref_src=twsrc%5Etfw">January 29, 2021</a></blockquote>
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US-STOCKS-POLITICS-GAMESTOP-ROBINHOOD

Robinhood CEO’s Interview With CNBC

GameStop

Multiple lawsuits have been filed Thursday against Robinhood Financial after the company restricted its users from trading GameStop and other shorted stocks it deemed volatile.
Brendon Nelson, a retail investor from Massachusetts, filed a suit in the Southern District of New York claiming that the company violated &#8220;the implied covenant of good faith and fair dealing&#8221; with its customers when it forbid users from making certain transactions.
&#8220;On or about January 27, 2021 Robinhood, in order to slow the growth of GME and deprived their customers of the ability to use their service, abruptly, purposefully, willfully, and knowingly pulled GME from their app,&#8221; the lawsuit says. &#8220;Meaning, retail investors could no longer buy or even search for GME on Robinhood’s app.&#8221;
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BREAKING: Class action complaint against <a href="https://twitter.com/RobinhoodApp?ref_src=twsrc%5Etfw">@RobinhoodApp</a> filed in the southern district of NY<a href="https://t.co/DuGP3LIQDQ">https://t.co/DuGP3LIQDQ</a> <a href="https://t.co/mw82RRoA2L">pic.twitter.com/mw82RRoA2L</a>
&mdash; Lydia Moynihan (@LJMoynihan) <a href="https://twitter.com/LJMoynihan/status/1354836830169006081?ref_src=twsrc%5Etfw">January 28, 2021</a></blockquote>
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Richard Gatz, a Robinhood user and attorney from Naperville, Illinois, also filed a lawsuit alleging that the company &#8220;continued to allow trading for institutional investors&#8221; after forbidding individual investors from purchasing not just GameStop stock, but also several other shorted stocks that were popular among Redditors, such as Blackberry, Nokia, and AMC Entertainment.
Gatz&#8217;s lawsuit claims Robinhood &#8220;halted trading on its securities exchange platform of Blackberry (BB), Nokia (NOK), and AMC Theatres (AMC) for retail investors. On information and belief, they have continued to allow trading for institutional investors.&#8221;
The lawsuit explained that Gatz &#8220;owned two (2) options contracts for BB at the time of the trading halt. The value of these options decreased by almost two-hundred percent and the BB stock price fell over ten dollars ($10) from the prior days close. On information and belief, the halting of trading of these stocks was to protect institutional investment at the detriment of retail customers. Furthermore, this appears to be in lock-step with other securities trading platforms, such as Ally Financial, TD Ameritrade and potentially others.&#8221;
Miami lawyer Jeff Erez, who specializes in securities-fraud litigation and has represented clients against Robinhood before, is not optimistic the lawsuits will be successful, telling <a href="https://www.bloomberg.com/news/articles/2021-01-28/robinhood-customers-sue-over-removal-of-gamestop" target="_blank" rel="noopener noreferrer">Bloomberg</a>: “I’m looking at <a title="Click to view webpage." href="https://cdn.robinhood.com/assets/robinhood/legal/Robinhood%20Customer%20Agreement%20(June%2022)%20(1).pdf" target="_blank" rel="nofollow noopener noreferrer">the Robinhood contract</a>, and it says in black-and-white they can block or restrict trades at any time. I’m not aware of any law that would guarantee you a right to purchase a certain security at a certain brokerage firm.”
As The Daily Wire <a href="https://www.dailywire.com/news/big-tech-bites-back-robinhood-suspends-trading-discord-bans-wallstreetbets-over-gamestocp-surge" target="_blank" rel="noopener noreferrer">reported</a>:
<blockquote>Robinhood, the free stock trading app that Reddit traders used to buy shares of GameStop, resulting in an intense stock surge, has banned trading the retailer’s shares, as well as shares of several other companies targeted by r/WallStreetBets, halting GameStop’s meteoric rise.
Discord, an independent VoIP and instant messaging service largely used by gamers, also banned members of r/WallStreetBets for “hate speech” after the group migrated to Discord servers following a brief Reddit outage.</blockquote>
Related: <a href="https://www.dailywire.com/news/big-tech-bites-back-robinhood-suspends-trading-discord-bans-wallstreetbets-over-gamestocp-surge" target="_blank" rel="noopener noreferrer">Big Tech Bites Back: Robinhood Suspends Trading, Discord Bans ‘WallStreetBets’ Over GameStock Surge</a>

Robinhood App

Lawsuits Filed Against Robinhood After Restricting Trades Of Shorted Stocks

The GameStop short bet controversy has sent America into the bizarro world, where Rep. Alexandria Ocasio-Cortez (D-NY), Sen. Ted Cruz (R-TX), and Donald Trump Jr. all agree on something.
On Thursday, after the stock market app Robinhood halted all trading on GameStop stock, the socialist congresswoman, the conservative senator, and the son of former President Trump all unanimously derided the move.
&#8220;This is unacceptable. We now need to know more about <a class="css-4rbku5 css-18t94o4 css-901oao css-16my406 r-1n1174f r-1loqt21 r-poiln3 r-bcqeeo r-qvutc0" role="link" href="https://twitter.com/RobinhoodApp" data-focusable="true">@RobinhoodApp</a>’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,&#8221; tweeted AOC.
&#8220;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 &#8211; especially those allowing sales, but freezing purchases,&#8221; she added.
Ted Cruz retweeted AOC&#8217;s status and said, &#8220;Fully agree.&#8221;
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Fully agree. 👇 <a href="https://t.co/rW38zfLYGh">https://t.co/rW38zfLYGh</a>
&mdash; Ted Cruz (@tedcruz) <a href="https://twitter.com/tedcruz/status/1354833603943931905?ref_src=twsrc%5Etfw">January 28, 2021</a></blockquote>
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Donald Trump Jr. was equally incensed by the move.
&#8220;It took less than a day for big tech, big government and the corporate media to spring into action and begin colluding to protect their hedge fund buddies on Wall Street. This is what a rigged system looks like, folks! <a class="css-4rbku5 css-18t94o4 css-901oao css-16my406 r-1n1174f r-1loqt21 r-poiln3 r-bcqeeo r-qvutc0" role="link" href="https://twitter.com/hashtag/RobinHood?src=hashtag_click" data-focusable="true">#RobinHood</a> <a class="css-4rbku5 css-18t94o4 css-901oao css-16my406 r-1n1174f r-1loqt21 r-poiln3 r-bcqeeo r-qvutc0" role="link" href="https://twitter.com/hashtag/RedditArmy?src=hashtag_click" data-focusable="true">#RedditArmy</a> <a class="css-4rbku5 css-18t94o4 css-901oao css-16my406 r-1n1174f r-1loqt21 r-poiln3 r-bcqeeo r-qvutc0" role="link" href="https://twitter.com/hashtag/GME?src=hashtag_click" data-focusable="true">#GME</a> <a class="css-4rbku5 css-18t94o4 css-901oao css-16my406 r-1n1174f r-1loqt21 r-poiln3 r-bcqeeo r-qvutc0" role="link" href="https://twitter.com/hashtag/GMEtothemoon?src=hashtag_click" data-focusable="true">#GMEtothemoon,</a>&#8221; tweeted Don Jr.
The former president&#8217;s son also shared a post from Barstool CEO Dave Portnoy, who tweeted: “Somebody is going to have to explain to me in what world RobinhoodApp and others literally trying to force a crash by closing the open market is fair? They should all be in jail.”
&#8220;If they take down WallStreetBets, they better take down every single Wall Street hedge fund that has been endlessly using gangster tactics to make a quick buck,&#8221; the WallStreetBets chairman tweeted.
&#8220;He’s not wrong&#8230; they just aggregated enough small retail investors in an open forum to move markets just like the big guys. It’s actually amazing to watch!!!&#8221; responded Don Jr.
<blockquote class="twitter-tweet" data-width="500" data-dnt="true">
It took less than a day for big tech, big government and the corporate media to spring into action and begin colluding to protect their hedge fund buddies on Wall Street. This is what a rigged system looks like, folks! <a href="https://twitter.com/hashtag/RobinHood?src=hash&amp;ref_src=twsrc%5Etfw">#RobinHood</a> <a href="https://twitter.com/hashtag/RedditArmy?src=hash&amp;ref_src=twsrc%5Etfw">#RedditArmy</a> <a href="https://twitter.com/hashtag/GME?src=hash&amp;ref_src=twsrc%5Etfw">#GME</a> <a href="https://twitter.com/hashtag/GMEtothemoon?src=hash&amp;ref_src=twsrc%5Etfw">#GMEtothemoon</a> <a href="https://t.co/UhrwGHCjng">https://t.co/UhrwGHCjng</a>
&mdash; Donald Trump Jr. (@DonaldJTrumpJr) <a href="https://twitter.com/DonaldJTrumpJr/status/1354793103090212865?ref_src=twsrc%5Etfw">January 28, 2021</a></blockquote>
<script async src="https://platform.twitter.com/widgets.js" charset="utf-8"></script>
<blockquote class="twitter-tweet" data-width="500" data-dnt="true">
He’s not wrong&#8230; they just aggregated enough small retail investors in an open forum to move markets just like the big guys. It’s actually amazing to watch!!! <a href="https://twitter.com/hashtag/GME?src=hash&amp;ref_src=twsrc%5Etfw">#GME</a> <a href="https://twitter.com/hashtag/GMEtothemoon?src=hash&amp;ref_src=twsrc%5Etfw">#GMEtothemoon</a> <a href="https://t.co/kfs9mZy9QI">https://t.co/kfs9mZy9QI</a>
&mdash; Donald Trump Jr. (@DonaldJTrumpJr) <a href="https://twitter.com/DonaldJTrumpJr/status/1354643375610322945?ref_src=twsrc%5Etfw">January 28, 2021</a></blockquote>
<script async src="https://platform.twitter.com/widgets.js" charset="utf-8"></script>
As The Daily Wire <a href="https://www.dailywire.com/news/big-tech-bites-back-robinhood-suspends-trading-discord-bans-wallstreetbets-over-gamestocp-surge">reported</a> on Thursday, the free stock trading app Robinhood halted all trading on GameStop (GME), which rose nearly 900% in just five days after the Reddit board WallStreetBets intentionally drove up the company&#8217;s stock price as a financial hit against hedge fund managers engaged in short selling.
More below:
<blockquote>The GameStop stock surge was orchestrated by Redditors looking to send a message to Wall Street hedge fund managers engaging in short selling. “GameStop started in January valued at $17.25 and had been heavily ‘shorted,’ meaning many Wall Street hedge-fund short-sellers expected the firm to collapse and the value to plunge with it,” Daily Wire noted.
So far, the Redditors are succeeding, <a href="https://www.cnbc.com/2021/01/28/robinhood-interactive-brokers-restrict-trading-in-gamestop-s.html">according to CNBC</a>. “Hedge fund Melvin Capital <a href="https://www.cnbc.com/2021/01/27/hedge-fund-targeted-by-reddit-board-melvin-capital-closed-out-of-gamestop-short-position-tuesday.html">closed out its short position</a> in GameStop on Tuesday after taking huge losses as a target of the army of retail investors. Citadel and Point72 have infused close to $3 billion into [Melvin Capital] to shore up its finances.”
Trading services and government regulators, though, have been vocal over their concern for “market volatility” related to the stock surge, and Wall Street’s hedge fund bankers seem to be panicking, based on social media posts decrying Robinhood’s democratization of the stock-trading process.</blockquote>

Postmaster General To Testify To House Committee About Department’s Ability To Handle Mail In Voting

AOC, Don Jr., Ted Cruz All Rip Robinhood For Halting GameStop Trading: ‘Unacceptable’

Alexandria Ocasio-Cortez

Donald Trump Jr.

Ted Cruz

The GameStop controversy that has dominated the news cycle over the last couple of days has triggered many people to wonder what the fuss is all about. Below is an explanation of the controversy, the terms bandied about when the news reports it, and a chronology of events surrounding the story.
First a brief explanation of some key terms and phrases associated with the story:
“GameStop”: A chain of 5,000 retail stores nationwide, selling and renting video games, which had been looked at as obsolete by Wall Street investors because people play video games online now, rather than buying physical video games to bring home.
“Shorting a stock”: An investor, called a “short seller,” believing the market value of a certain stock is going to plunge, borrows that stock from a lender, sells it to a buyer, then, after the value has dipped, buys it back for less than what he made selling it, thus turning a profit, then returns it to the lender.
“Short squeeze”: A “short seller” discovers he made a mistake— the value of the stock he sold goes up instead of down. This forces him to buy it back as quickly as he can before the value goes higher, often at a loss vis-a-vis what he sold it for, then returns it to the lender.
For example, if John “shorts” a stock borrowed from Bill, sells it to Kevin for $5 a share, and then the value drops to $3 a share, John would buy it back at $3 a share, making a profit, before he returns it to Bill. But if the value rises to $7 a share, John will be forced to buy it back at a loss, and he may have to hurry if the stock continues to rise in value.
“Margin requirement”: the minimum equity (value of the stock held by an investor) an investor must hold in an account after purchasing a stock. Investopedia stated, “It is currently set at 25% of the total value of the securities in a margin account as per <a href="https://www.investopedia.com/terms/f/finra.asp" data-component="link" data-source="inlineLink" data-type="internalLink" data-ordinal="1">Financial Industry Regulatory Authority (FINRA)</a> requirements.”
GameStop started in January valued at $17.25, and had been heavily “shorted,” meaning many Wall Street hedge-fund short-sellers expected the firm to collapse and the value to plunge with it. A Wall Street hedge fund manager, Andrew Left from Citron Research, shorted GameStop, then “held a livestream presentation arguing the stock would fall by 50%,” <a href="https://www.wsj.com/articles/gamestop-stock-short-squeeze-ugly-side-11611750250">The Wall Street Journal</a> reported.
But then users of the Reddit group WallStreetBets, led by a financial guru known as “Roaring Kitty&#8221; (who had <a href="https://meaww.com/roaring-kitty-financial-guru-hero-game-stop-stock-skyrocketing-drains-billions-from-hedge-funds">reportedly invested</a> roughly $56,000 to build a stake of 50,000 shares in GameStop), sensing they could execute a “short squeeze” on the Wall Street investors, urged millions of members to buy and hold GameStop stock.
That forced the hedge funds to bid for the shares as quickly as they could before the value soared even further. That buying only fueled the value of the stock to soar further.
In addition, Left reportedly began to get threats, which he reported to the FBI, asking for an investigation. “Mr. Left has also contacted the Federal Bureau of Investigation and the Securities Exchange Commission about the more vicious abuse and what he sees as collusion among the investors,” The Journal noted.
That reportedly prompted the stock to rise even higher, because it looked to the small investors as though they had bested the Wall Street experts.
By Wednesday GameStop’s value had skyrocketed to $347.51.
The small investors who caused the price to soar used free trading apps such as Robinhood to buy the GameStop stock.
“Hedge funds Citron and Melvin Capital said on Wednesday that they had closed out their short positions after suffering undisclosed losses, likely totaling in the billions,” <a href="https://www.dailymail.co.uk/news/article-9193697/GameStops-three-largest-shareholders-gotten-3BILLION-richer-two-weeks.html">the Daily Mail</a> reported.
The financial apps soon took action. “Robinhood changed margin requirements for GameStop and AMC Entertainment to 100%,” TechCrunch <a href="https://finance.yahoo.com/news/trading-apps-responding-gamestop-fustercluck-211742558.html">noted</a>. “The short squeeze … also fueled a 2% slide in the benchmark S&amp;P 500 on Wednesday as investors sold other assets to cover their losses,” <a href="https://www.reuters.com/article/us-retail-trading-idUSKBN29X12T">Reuters</a> reported.
The Daily Mail wrote, “Jacob Frenkel, Securities Enforcement Practice chair for law firm Dickinson Wright, said the SEC would likely look at whether the messaging by investors holding the stock long-term and activists betting against it was manipulative. ‘With federal prosecutors having become much more sophisticated in their cases over the years on securities trading &#8230; it is reasonable to believe that any SEC investigation could well have a parallel criminal investigation.’”
Massachusetts state regulator William Galvin urged the New York Stock Exchange to suspend GameStop for 30 days, saying, “This isn&#8217;t investing, this is gambling. This is obviously contrived. … It&#8217;s diminishing the integrity of the marketplace and it´s putting individual investors at risk.”
Muddy Waters LLC’s Carson Block stated that he thought in time the small investors would regret their actions, saying, “Frenzied retail speculation always leads to tears.”

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