Robinhood was founded to "provide everyone with access to financial markets, not just the wealthy." But after days of small-time amateurs crushing overexposed hedge funds, it is blocking users from trading shares of GameStop, AMC and other companies involved in the action. Say hi to Wall Street's new sheriff.
Retail brokerages restricted trading on Thursday in GameStop and other stocks caught in a frenzy that has captivated Wall Street and caused big losses for hedge funds. In some cases, investors would be able to sell only their positions and not open new ones.
After the announcement of restrictions by free-stock trading pioneer Robinhood and Interactive Brokers, shares of GameStop initially reversed their gains, sliding quickly into negative territory. The stock, which traded above $500 at one point in premarket trading, was below $290 per share shortly after the opening bell. An hour later, it gained another $100 per share for a gain of 11% from Wednesday's closing.
To paraphase Voltaire, the Free Market is like the Holy Roman Empire: neither holy, nor Roman, nor an empire.