The GameStop shorting saga is already the craziest story of 2021 – don’t worry, I’m sure that February will bring us about five more that will top it – and people were up in arms yesterday at investing app RobinHood for blocking trades from being made on its platform to ‘protect investors’.
Featured Image VIA
Obviously there’s a major ethical question over their decision to do this because essentially hedge funds do this sort of thing all the time, but it’s now being blocked because the little guy has mobilised as one against hedge funds. However, RobinHood CEO Vlad Tenev has decided to double down on the company’s decision to block trades by saying the following:
Image VIA
As a brokerage firm, Robinhood has many financial requirements, including SEC net capital obligations and clearinghouse deposits.
Some of these requirements fluctuate based on volatility in the markets and can be substantial in the current environment.
Our customers and our mission to increase access to investing remain our priority.
That will never change. I am proud of all our staff for putting their heads together and working to immediately communicate to our customers what was going on.
I want to clarify a few things and also explain why Robinhood made the decisions it did to restrict purchasing of certain securities,.
As a brokerage firm, Robinhood has many financial requirements, including SEC net capital obligations and clearinghouse deposits. Some of these requirements fluctuate based on volatility in the markets and can be substantial in the current environment.
These requirements exist to protect investors and the markets and we take our responsibilities to comply with them seriously, including through the measures we have taken today.
To be clear, this decision was not made on the direction of any market maker we route to or other market participants.
Starting tomorrow, we plan to allow limited buys of these securities. We’ll continue to monitor the situation and make adjustments as needed.
Yeah, I’m not really sure what he’s saying there – kinda just sounds like a load of waffle without actually saying anything at all – but I guess that’s what most people see when they look at the stock market. I suppose he’s just trying to justify the app blocking these trades but I’m not sure if he really does?
Up to you to decide, but people are mad with RobinHood and I’m not surprised. Some great memes about them on our Instagram account right now.
For more of the same, check out this open letter to hedge funds from a GameStop Subredditor. They’re really in it for keeps.
