A leading progressive Democrat slams Robinhood's move to restrict trading on some stocks after Reddit-fueled surge
A prominent House Democrat slammed Robinhood's move to restrict trading on some stocks like Gamestop and endorsed the idea of holding a congressional hearing on the popular trading app's decision.
Rep. Ro Khanna, a leading member of the Congressional Progressive Caucus, said there was "visceral anger" at hedge funds for their role propelling economic inequality in the United States.
"Everyone on Robinhood should have equal access for trading," Khanna said in an interview with Insider. "They can't just shut down trading for retail investors and not hedge funds."
He urged additional regulations on Wall Street such as tougher rules on short-selling and a financial transactions tax, which is a levy on the buying and selling of stocks. President Joe Biden endorsed one during the 2020 campaign.
Khanna, a third-term Democrat, also backed Rep. Alexandria Ocasio Cortez's call on Thursday to hold a hearing.
"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," the New York congresswoman said in a Thursday tweet. Republican Sen. Ted Cruz of Texas supported her statement, despite their repeated sparring online.
Over the past few days, a large group of ordinary investors have banded together to take on powerful Wall Street hedge funds. Those investors — many forming part of the popular Reddit forum r/WallStreetBets — have spurred eye-popping gains for shares of heavily shorted stocks like Gamestop, AMC, and Nokia.
But many of those stocks plunged on Thursday after Robinhood curbed trading for users, who could only sell their shares but not buy additional ones. The step triggered fierce criticism from lawmakers as well as on social media.