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Only in 2021.
In recent days, Reddit users have been pushing up shares of well-sold stocks, especially those of GameStop, a video game retailer. They tightened hedge funds and allowed massive losses for people like Steve Cohen and Dan Sundheim.
Now, stock trading apps like Robinhood have suspended purchases on these stocks.
“We are constantly monitoring the markets and making changes if necessary. In light of recent volatility, we are restricting trading for certain securities to close positions only, including $ AMC, $ BB, $ BBBY, $ EXPR, $ GME, $ KOSS, $ NAKD and $ NOK. We have also increased the margin requirements for certain stocks, ”revealed Robinhood in a blog post Thursday, listing of AMC Entertainment shares, BlackBerry, Bed bath and beyond, Express, GameStop, Koss Corp., Naked Brand Group and Nokia.
Interactive Brokers and TD Ameritrade have also placed restrictions on trading in BlackBerry and GameStop stocks.
Brokerage firms face the same existential question that social media firms face. One has the capacity to destabilize an election, the other, the stock market. It’s speculated that the recent market volatility is the result of the sale of shares by hedge funds to cover short positions which are at risk due to the latest rebounds.
But Robinhood, in particular, has made a name for itself by focusing on democratization of access to finance. His decision to cut transactions on GameStop sparked cries of outrage on social media. “Maybe not covering (lol) your whole brand on the promise to ‘democratize finance for all’ if you don’t do it when it matters most,” a Twitter user wrote follow the news of Robinhood’s decision.
How will regulators react in this new age of the Internet? President Joe Biden should take a closer look at regulations disinformation on social media platforms, and the GameStop saga flies away allegations of market manipulation in what some consider a pump and dump system. In a typically vague message released Wednesday, the Securities and Exchange Commission said it was aware of the lingering volatility and was “working with our fellow regulators to access the situation.”
The market is messy, yes. But in much of the media, the story has been distilled into a fight between the rich man and the middle man. It certainly misses the point that the GameStop stock race has also been supported by big investors who will make a lot of money.
Yet in this new era, I wonder if the SEC could find itself at the center of a more delicate matter than it seems.
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