AOC and Ted Cruz Agree: Slam Robinhood Over GameStop Trading Freeze
As the influence of discussions on Reddit continues to drive significant stock price increases, the trading platform Robinhood initiated restrictions on certain transactions Thursday morning.
This action prompted strong reactions from the Reddit community and also drew criticism from several members of Congress. The situation unexpectedly fostered agreement across the political spectrum, with Texas Senator Ted Cruz publicly supporting progressive Democrats who voiced concerns about the company’s practices.
Robinhood explained in a blog post Thursday morning that it was limiting some transactions “due to recent market volatility,” specifically affecting stocks including $AAL, $AMC, $BB, $BBBY, $CTRM, $EXPR, $GME, $KOSS, $NAKD, $NOK, $SNDL, $TR and $TRVG. While investors who already hold these stocks can still sell their shares, the change prevents further investment from a large number of individual investors.
Representative Rashida Tlaib characterized Robinhood’s decision as “completely unacceptable” and proposed that the House Financial Services Committee investigate what she described as “market manipulation” by the financial technology company.
“The company is hindering trading activity to safeguard the interests of Wall Street hedge funds, potentially costing their users millions of dollars to protect those who have historically treated the stock market as a speculative venture,” Tlaib stated.
Representative Alexandria Ocasio-Cortez, also a member of the committee, expressed support for a hearing regarding Robinhood’s actions, labeling the situation an “unjustified” measure to impede trading by individual investors.
The alignment of Cruz and Ocasio-Cortez on this issue is particularly noteworthy given their recent disagreements. Earlier in the month, Cruz accused Ocasio-Cortez of dishonesty after she called for his resignation following revelations that the Texas Senator raised funds based on unsubstantiated claims of election fraud during the Capitol attack.
Update: Ocasio-Cortez declined the bipartisan support offered by Cruz, but with Democrats holding the majority, this is unlikely to significantly alter the prospects for committee hearings.
In the Senate, the incoming Chairman of the Senate Banking, Housing, & Urban Affairs Committee, Senator Sherrod Brown, announced plans to convene a hearing “on the current condition of the stock market.”
Representative Ro Khanna, representing Silicon Valley, also addressed Robinhood’s decision to halt certain trades, criticizing the platform for excluding small investors while large hedge funds attempt to regain control of the market.
“We will no longer allow wealthy hedge fund managers to manipulate the stock market for their own benefit and then withdraw when they experience losses,” Khanna said Thursday, advocating for increased regulation and highlighting the growing wealth gap within the nation.
” … This situation has underscored the potential of technology to broaden access to American financial systems, ultimately empowering more individuals to participate in our economic framework,” Khanna added.
