The GameStop stock saga continues, Apple releases more details about its privacy changes and Qualtrics goes public. This is your Daily Crunch for January 28, 2021.
The big story: Robinhood restricts GameStop trading
Robinhood has responded to an upsurge in retail investors buying shares in companies like GameStop, AMC and Blockbuster by restricting trading on “certain securities” to “position closing only,” meaning that users can no longer buy more of the companies’ stocks. (It says it will allow “limited buys” tomorrow.)
This comes after the current buying spree — targeting stocks shorted by institutional investors and spurred by the WallStreetBets forum on Reddit — took Robinhood and Reddit to the top of the app charts.
Now, Robinhood is being hit with numerous 1-star reviews, and the move also attracted criticism from politicians on both sides of the aisle, with Rep. Alexandria Ocasio-Cortez describing it as “unacceptable” and Senator Ted Cruz tweeting, “Fully agree.”
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Robinhood restricts trading in GameStop, other names involved in frenzy. Free-stock trading pioneer Robinhood and Interactive Brokers
Interactive Brokers
Interactive Brokers LLC (IB) is an American multinational brokerage firm. It operates the largest electronic trading platform in the United States by number of daily average revenue trades. The company brokers stocks, options, futures, EFPs, futures options, forex, bonds, funds, and some cryptocurrencies.
https://en.wikipedia.org › wiki › Interactive_Brokers
took steps to curb the wild trading activity in heavily shorted names like GameStop. In some cases, investors would only be able to sell their positions and not open new ones.
Although Robinhood's decision to halt buying activity was made to help it meet clearinghouse requirements, it also contributed to the narrative that the markets are rigged against individual investors, as several Reddit users have told IR Magazine.
Robinhood has removed temporary trading restrictions on all stocks including GameStop and AMC Entertainment Holdings. A wave of retail investors inspired by the Reddit board WallStreetBets piled in on GameStop shares and other heavily shorted stocks last week, resulting in huge losses for some hedge funds.
Apps like Webull, M1 and Public all cited clearing firm charges when they suspended the trading of stocks like GME last month. Robinhood said in a blog post published at the end of January said that it, too, suspended trading in GME and other securities due to clearing firm costs.
If your account is flagged for PDT, you're required to have a portfolio value of at least $25,000 to continue day trading. Your portfolio value is the sum of your cash, stocks, and options, and doesn't include crypto positions.
You may receive this message if you have an outstanding pending order for the shares of stock you'd like to sell. You'll need to cancel any outstanding orders before you can sell the shares. To view your pending orders in your mobile app: Tap the Account icon in the bottom right corner of your home screen.
These restrictions were imposed in early 2021 by Robinhood, TD Ameritrade, and other retail-oriented brokerage firms in dozens of stocks, including GameStop (ticker symbol GME), a videogame retailer.
You can only sell a delisted Robinhood stock at its current price on the OTC market, and there may be no one interested in buying it. OTC markets often suffer from limited liquidity, as many investors shy away from buying them. Click Here To Sign Up With Robinhood + Get 1 FREE Stock!
If you received misleading information or were prohibited from using the online trading platform, Robinhood could owe you compensation. Our attorneys at Anastopoulo Law Firm can help you file a lawsuit after a complimentary case review.
If you do not meet the minimum equity requirement, you will receive a day trade violation and your account will be locked for 90 days. You can remove this restriction by closing a trading day at or above $25,000, but frequent violations may cause the broker to limit your account activity to only closing positions.
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