As it happenedended1611882458

Gamestop stock news: Robinhood boss defends trading halt as investors set to get access back

Hedge funds, Gamestop, Reddit investors explained

Video game retailer GameStop’s stock price has been on a rollercoaster this week due to the actions of users on the WallStreetBets subreddit and the subsequent blocking of their ability to buy stock by several online brokerages.

The Reddit users pushed the stock up from $20 on 11 January to a high of $146.97. At its peak on Thursday morning, the stock was valued at 468.49. Other stocks with a similar profile to GameStop - firms that have struggled in the pandemic - have also soared in value including Bed, Bath & Beyond, AMC, and Nokia.

The decision by online brokerage Robinhood and others to stop the purchase of a number of stocks by amateur investors led to a sharp backlash online and a demand for an investigation by both market commentators and lawmakers. 

After the morning surge in value in pre-market trading, stock in GameStop dropped sharply as markets opened on Thursday, before climbing again. By lunchtime it was down 32 per cent, eventually closing down 44 per cent wiping out almost $11bn in market value.

However, Robinhood announced it will allow limited purchasing of the restricted stocks on Friday causing a bump in the value of shares after the closing bell.

Was this Wall Street’s equivalent of a populist uprising as some are saying or were other forces at work? Elizabeth Warren questioned the David vs Goliath narrative in her calls for more regulation and a sharper toothed SEC.

Both the House and the Senate will now hold hearings into what transpired.

Follow all the latest in our rolling coverage.

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Rep, Ted Lieu to Robinhood: ‘Why?’

Why indeed.

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Warren: Focus is on SEC’s inability to deal with stock manipulation

In an appearance on CNBC’s Closing Bell, Democratic Senator Elizabeth Warren called out the SEC for sitting back when it came to creating and enforcing rules on market manipulation.

She also questioned whether the popular narrative that the Reddit investors vs Wall Street establishment was correct.

“That’s what happens when you don’t have an honest market.”

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Elon Musk: Discord has gone ‘Corpo’ over WallStreetBets

Elon Musk accused Discord of going “Corpo” after it took down the Reddit group behind the spike in GameStop’s share price.

The billionaire Tesla founder took to Twitter to slam the messaging service with the derogatory term for “going corporate” after the r/WallStreetBets had its server temporarily banned.

“Even Discord has gone corpo,” tweeted the South African-born entrepreneur.

Graeme Massie report for The Independent.

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Robinhood tells users it may close ‘at-risk’ positions

Stock trading platform has told users that it may close out some of their positions as a measure to reduce account risk.

Bloomberg reports a spokesperson as saying that “unprecedented volatility” surrounding shares of GameStop and AMC as increasing risks related to their trading.

The company informed users with options in the two companies that expire on 29 January that it would set them as closing transactions only.

Proactive measures may be taken to reduce risk in positions that are considered at-risk prior to their expiration date.

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The wrong Robin Hood

This was always going to happen.

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Musk: ‘Shorting is a scam’

Elon Musk calls shorting the market a "scam".

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Two law suits filed against Robinhood for ‘manipulating the market’

The first lawsuit, filed by Robinhood user Brendon Nelson in the Southern District of New York, alleged that Robinhood engaged in unlawful market manipulation by removing GameStop from its platform.

Robinhood purposefully, willfully, and knowingly removing the stock ‘GME’ from its trading platform in the midst of an unprecedented stock rise thereby deprived retail investors of the ability to invest in the open-market and manipulating the open-market.

Since pulling the stock from their app, GME prices have gone up, depriving investors of potential gains. Additionally, in the event GME goes down, Robinhood has deprived investors of ‘shorting’ GME in the hopes the price drops. In sum, Robinhood has completely blocked retailer investors from purchasing GME for no legitimate reason, thereby depriving retailer investors from the benefits of Robinhood’s services.

The second, brought by plaintiff Richard Gatz, alleges: 

The Defendant halted trading on its securities exchange platform of Blackberry (BB), Nokia (NOK), and AMC Theatres (AMC) for retail investors. On information and belief, they have continued to allow trading for institutional investors. Richard Joseph Gatz (hereinafter referred to as the "Plaintiff") owned two (2) options contracts for BB at the time of the trading halt. The value of these options decreased by almost two-hundred percent and the BB stock price fell over ten dollars ($10) from the prior days close. On information and belief, the halting of trading of these stocks was to protect institutional investment at the detriment of retail customers. Furthermore, this appears to be in lock-step with other securities trading platforms, such as Ally Financial, TD Ameritrade and potentially others.

Citing “irreparable injury” the suit continues: 

The halt of retail trading for these stocks has caused irreparable harm and will continue to do so. Plaintiff is unable to get fair market value for his options contracts and the manipulation has caused the price of the BB to fall. If the stocks are not allowed to be trading it is likely that Plaintiff will take a financial loss solely due to the Defendant's behavior and manipulation of their trading platform. The Defendant has on information and belief continued to allow investment in these securities by instititutional investors who have benefited from the stoppage of retail investment.

via Law & Crime

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Wolf of Wall Street author weighs in on GameStop

The Wolf of Wall Street author Jordan Belfort has weighed in on the ongoing stock price surge of brands like GameStop and AMC, saying, “there is some sort of loose crime going on, but it's going to be a very tough one to prove, I think.”

In an interview with CNN Business, Belfort, who made a fortune in the 1990s as a New York City stockbroker with his firm but ultimately spent 22 months in prison for fraud and corruption, asserted that “if you could prove that they are actually colluding together, then that would be illegal.”

Rachel Brodsky reports.

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GameStop closes down 44%

After a rollercoaster day, shares in GameStop closed down 44 per cent on the previous day’s close at 193.6.

Early trading saw the share price spike to 468 points.

Overall the Dow Jones Industrial Average closed up 300 points at 30,603.

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House to hold hearing on short selling and online trading

House Financial Service Committee to hold hearing on short selling and online trading platforms, Chairwoman Maxine Waters announces.

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