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Only in 2021.
In recent days, Reddit users have been pushing up shares of many shorted stocks, especially those of GameStop, a video game retailer. She squeezed hedge funds and caused huge losses to the likes of Steve Cohen and Dan Sundheim.
Now stock trading apps like Robinhood have paused purchases on such stocks.
“We continuously monitor the markets and make adjustments where necessary. In light of recent volatility, we are limiting trades for certain securities to closing positions only, including $ AMC, $ BB, $ BBBY, $ EXPR, $ GME, $ KOSS, $ NAKD and $ NOK. We have also increased margin requirements for certain securities, ”Robinhood revealed in a blog post Thursday, referring to shares of AMC Entertainment, BlackBerry, Bed Bath & Beyond, Express, GameStop, Koss Corp., Naked Brand Group and Nokia.
Interactive Brokers and TD Ameritrade have also imposed restrictions on the trading of BlackBerry and GameStop stock.
Stock traders are faced with the same existential question that social media companies face. One has the ability to destabilize an election, the other the stock market. It has been speculated that the recent market volatility is the result of hedge funds selling stocks to cover short positions that are at risk as a result of the latest rallies.
But Robinhood in particular has made a name for itself by emphasizing the democratization of access to finance. The decision to restrict transactions on GameStop has sparked outrage on social media. “Maybe you shouldn’t cover your entire brand (lol) for the promise of ‘democratizing finance for all’ if you’re not going to do that at the one time that matters most,” wrote one Twitter user in response to it. news of Robinhood’s decision.
How will regulators react in this new era of the Internet? President Joe Biden is expected to take a stricter look at the regulation of misinformation on social media platforms, and the GameStop saga fuels claims of market manipulation in what some consider a pump-and-dump scheme. In a characteristically vague message released Wednesday, the Securities and Exchange Commission said it was aware of the ongoing volatility and “worked with our fellow regulators to access the situation.”
The market is a mess, yes. But in many media outlets, the story has distilled into a fight between the rich and the average man. It certainly lacks the fact that the run in GameStop stock was also backed by big investors who are set to win quite a bit financially.
Still, in this new era, I wonder if the SEC is at the center of a trickier case than it seems.
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