U.S. regulators set to investigate Robinhood over GameStop Saga and March Trading Outages
March 1, 2021 10:53 AM
Popular trading app Robinhood confirmed on Friday that regulators in the U.S. were interested in looking into the company's recent trading limitation on some stocks.
Corps like GameStop soared last month during a social media-fueled short squeeze which resulted in the brokerage restricting buying of heavily shorted stocks by hedge funds.
Robinhood whose trading app has become popular over the previous year, said in a regulatory filing it has set out $26.6 million as settlement relating to trading outages in March 2020.
The broker which was at the center of madness that gripped retail investors in January 2021 after they restricted buying of some stocks , just after Reddit thread WallStreetBets made calls to trade certain stocks that were being heavily shorted by hedge funds, which resulted in heavy losses.
WallStreetBets stirred a flurry of activities which drove up prices of the shares until Robinhood, and a host of other brokers, restricted buying of the stocks, including GameStop and AMC Entertainment Holdings Inc,. the restrictions annoyed its users and took a backlash from major crypto industry players.
Robinhood who is believed to be in settlement talks with the Financial Industry Regulatory Authority (FINRA) over the outages.
As confirmed by the company, who said it has received inquiries from FINRA, SEC, and a host of others.
The broker also disclosed that the Security and Exchange Commission (SEC) and other regulators are also evaluating incidents of unauthorized takeovers on Robinhood customer accounts.