Robinhood, TD Ameritrade restrict trading of GameStop, AMC stock – CNET

GameStop

Investors are making big bets on shares of GameStop. 


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GameStop’s stock has continued to make big moves, briefly crossing $450 a share on Thursday, fueled by Reddit users collectively taking on the Wall Street establishment. But individual investors looking to make trades have faced multiple issues on trading sites and apps over recent days, with many experiencing service disruptions, according to Bloomberg. The frenzy over GameStop stock has led to TD Ameritrade and Robinhood restricting new purchases of particular stocks (GameStop and AMC, among others). It also led to the Wall Street Bets subreddit temporarily getting locked and a Discord server getting shut down for violating terms of service. 


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On Thursday morning, Twitter users began posting screenshots of their Robinhood app that showed a message appended to the stocks of GameStop, AMC, Nokia and Bed, Bath and Beyond: “This stock is not supported on Robinhood.”

Robinhood explained the move in a blog post Thursday morning, just before the stock exchanges opened: “In light of recent volatility, we are restricting transactions for certain securities to position closing only, including $AMC, $BB, $BBBY, $EXPR, $GME, $KOSS, $NAKD and $NOK.”

The @wsbmod Twitter account (which is tied to the Wall Street Bets subreddit community driving recent trades), responded in a tweet: “Individual investors are being stripped of their ability to trade on [the Robinhood app]. Meanwhile, hedge funds and institutional investors can continue to trade as normal.”

Webull, another investing service, tweeted Thursday that it had began restricting trades on shares of GameStop, AMC and headphone manufacturer Koss. Webull cited the “extreme volatility” of these particular stocks as the reason it will only allow users to sell their positions and not open any new ones. 

GameStop’s stock price had hovered between $4 and $20 for the past year — until Jan. 13 when it began skyrocketing. It closed Wednesday at $346.37. 

On Thursday morning, GameStop shares spiked to $467 but then crashed to $126 as investors were unable to purchase more shares. As of 8:46 a.m. PT, the stock’s price had rebounded to $207.90.

US Rep. Rashida Tlaib, a Democrat from Michigan, called on the House Committee on Financial Services to hold a hearing on the trading service’s actions and describing Robinhood’s efforts as “market manipulation.”

An image circulating on social media Wednesday showed an apparent warning from TD Ameritrade saying it put restrictions on the trading of stocks for GameStop, AMC and others. The brokerage firm confirmed the restrictions, saying it made the decisions “out of an abundance of caution amid unprecedented market conditions and other factors.”

“In the interest of mitigating risk for our company and clients, we have put in place several restrictions on some transactions in $GME [GameStop], $AMC [AMC Theaters] and other securities,” reads the TD Ameritrade message.

A TD Ameritrade spokesperson said the restrictions include increasing requirements needed to borrow money for stocks known as a margin and limiting transactions such as short sales

“It is not uncommon for us to make such decisions, which we consider on an individual basis, in the interest of mitigating risk,” the spokesperson said Wednesday via email. “We have been adjusting our requirements for several days as we continued to see trends indicating unusual volume in an unprecedented market environment, which appear to be divorced from traditional market fundamentals. We have made what we believe to be prudent and appropriate decisions to place some limits on certain transactions for certain securities.”

The fervor over stock trading hasn’t gone unnoticed. Nasdaq CEO Adena Friedman told CNBC on Wednesday that if there is any market manipulation going on, it may halt the trading of a stock to investigate. AMC is listed on Nasdaq, while GameStop is traded on the New York Stock Exchange. 

William Galvin, secretary of the Commonwealth of Massachusetts, told Barron’s on Wednesday that he thinks the New York Stock Exchange should “consider simply suspending it for a month and stop trading it.” 

The Securities and Exchanges Commission, which oversees the stock markets, told The New York Times it’s watching “internet chat rooms for signs of potential market manipulation.” 

“We are aware of and actively monitoring the on-going market volatility in the options and equities markets, and consistent with our mission to protect investors and maintain fair, orderly and efficient markets,” the SEC said in a statement Wednesday. “We are working with our fellow regulators to assess the situation and review the activities of regulated entities, financial intermediaries and other market participants.” 

Even the White House is “monitoring the situation,” White House press secretary Jen Psaki said Wednesday. 

Clarification: This story initially misstated the actions TD Ameritrade took. The firm put certain restrictions in place for GameStop and AMC stock, but did not ban them.