Stock trading app Robinhood on Friday confirmed it is cooperating with inquiries from US regulators into its decision to temporarily throttle purchases of shares in companies such as GameStop during frenzied trading in January.

The free brokerage platform is facing inquiries from federal financial regulators, state attorneys general and the US Congress, according to a filing with the Securities and Exchange Commission.

Robinhood, which says it is "cooperating" with the entities, is already facing dozens of class action lawsuits.

Also read|&nbsp;<a href="https://www.wionews.com/technology/teslas-elon-musk-grills-robinhood-ceo-vladimir-tenev-over-gamestop-trading-freeze-360790">Tesla's Elon Musk grills Robinhood CEO Vladimir Tenev over GameStop trading freeze</a>

The lawsuits "generally allege breach of contract, breach of the implied covenant of good faith and fair dealing, negligence, breach of fiduciary duty and other common law claims," Robinhood said in the filing.

"We believe that the claims in these lawsuits are without merit and intend to defend against them vigorously."

Key players in the GameStop shares trading frenzy told skeptical US lawmakers last week that their actions were above board and in line with ordinary stock market business.

Also read|&nbsp;<a href="https://www.wionews.com/technology/gamestop-prompts-surge-in-hyper-rally-after-elon-musks-tweet-359791">GameStop prompts surge in hyper-rally after Elon Musk's tweet</a>

Founders of Robinhood and the online forum Reddit were among those to testify at a House of Representatives financial services committee hearing.

Unprecedented recent volatility -- with shares in the GameStop video game store surging more than 400 percent -- prompted calls for regulators to review the role of social media, hedge funds and trading platforms which some allege manipulated the market.

The GameStop Wall Street upheaval was sparked via a "subreddit" known as WallStreetBets.

"I am not trying to throw anyone under the bus," Robinhood co-founder and chief executive Vlad Tenev told the House committee meeting.

"All I can say is Robinhood played it by the books."

Stock trading app Robinhood on Friday confirmed it is cooperating with inquiries from US regulators into its decision to temporarily throttle purchases of shares in companies such as GameStop during frenzied trading in January.

Stock trading app Robinhood on Friday confirmed it is cooperating with inquiries from US regulators into its decision to temporarily throttle purchases of shares in companies such as GameStop during frenzied trading in January. The free brokerage platform is facing inquiries from federal financial regulators, state attorneys general and the US Congress, according to a filing with the Securities and Exchange Commission. Robinhood, which says it is "cooperating" with the entities, is already facing dozens of class action lawsuits. Also read| Tesla's Elon Musk grills Robinhood CEO Vladimir Tenev over GameStop trading freeze The lawsuits "generally allege breach of contract, breach of the implied covenant of good faith and fair dealing, negligence, breach of fiduciary duty and other common law claims," Robinhood said in the filing. "We believe that the claims in these lawsuits are without merit and intend to defend against them vigorously." Key players in the GameStop shares trading frenzy told skeptical US lawmakers last week that their actions were above board and in line with ordinary stock market business. Also read| GameStop prompts surge in hyper-rally after Elon Musk's tweet Founders of Robinhood and the online forum Reddit were among those to testify at a House of Representatives financial services committee hearing. Unprecedented recent volatility -- with shares in the GameStop video game store surging more than 400 percent -- prompted calls for regulators to review the role of social media, hedge funds and trading platforms which some allege manipulated the market. The GameStop Wall Street upheaval was sparked via a "subreddit" known as WallStreetBets. "I am not trying to throw anyone under the bus," Robinhood co-founder and chief executive Vlad Tenev told the House committee meeting. "All I can say is Robinhood played it by the books."

Trading app Robinhood says facing US regulator inquiries

GameStop’s chief financial officer, Jim Bell, is leaving the company in late March, following a stock-trading frenzy that briefly sent shares in the video game retailer surging.

The company gave no reason for Bell’s departure in its announcement on Tuesday, but noted it would look for a successor “with the capabilities and qualifications to help accelerate GameStop’s transformation.” Bell joined GameStop less than two years ago.

GameStop jumped into the headlines in late January when amateur investors used trading apps to buy options and pump up its share price, defying hedge funds that had bet the price would fall. The chaotic trading led to congressional hearings last week, but executives from GameStop, which was essentially caught in the middle, were not called to testify.

GameStop’s share price closed at $45 on Tuesday. It reached $483 on Jan. 28 after starting the year at $19.

The wild swings in share price were detached from what was happening at the company, where a major stockholder has been trying to force a turnaround. In early January, Ryan Cohen, the manager of RC Ventures and a large stockholder, joined the GameStop board. He has been pressuring the company’s executive team to overhaul GameStop’s strategy and focus on digital growth. The company has more than 5,000 stores, many in American malls and shopping strips, but has steadily lost sales to major online retailers like Amazon.

Bell joined the company in June 2019 at the age of 51 from Wok Holdings, which owns the restaurant chain P.F. Chang's. In a short statement, GameStop thanked Bell “for his significant contributions and leadership, including his efforts over the past year during the COVID-19 pandemic.”

GameStop’s chief financial officer, Jim Bell, is leaving the company in late March, following a stock-trading frenzy that briefly sent shares in the video game retailer surging.

GameStop’s chief financial officer, Jim Bell, is leaving the company in late March, following a stock-trading frenzy that briefly sent shares in the video game retailer surging. The company gave no reason for Bell’s departure in its announcement on Tuesday, but noted it would look for a successor “with the capabilities and qualifications to help accelerate GameStop’s transformation.” Bell joined GameStop less than two years ago. GameStop jumped into the headlines in late January when amateur investors used trading apps to buy options and pump up its share price, defying hedge funds that had bet the price would fall. The chaotic trading led to congressional hearings last week, but executives from GameStop, which was essentially caught in the middle, were not called to testify. GameStop’s share price closed at $45 on Tuesday. It reached $483 on Jan. 28 after starting the year at $19. The wild swings in share price were detached from what was happening at the company, where a major stockholder has been trying to force a turnaround. In early January, Ryan Cohen, the manager of RC Ventures and a large stockholder, joined the GameStop board. He has been pressuring the company’s executive team to overhaul GameStop’s strategy and focus on digital growth. The company has more than 5,000 stores, many in American malls and shopping strips, but has steadily lost sales to major online retailers like Amazon. Bell joined the company in June 2019 at the age of 51 from Wok Holdings, which owns the restaurant chain P.F. Chang's. In a short statement, GameStop thanked Bell “for his significant contributions and leadership, including his efforts over the past year during the COVID-19 pandemic.”

GameStop’s top finance officer, Jim Bell, is resigning

A young day trader who went by the screen name Roaring Kitty and found himself at the center of the GameStop stock trading frenzy will make his first public appearance at a congressional hearing Thursday.

The trader, Keith Gill, was on a list released Friday of the panel that will appear in front of the House Committee on Financial Services as it examines the circumstances around the wild spikes in prices of GameStop and other so-called meme stocks.

Also read|&nbsp;<a href="https://www.wionews.com/business-economy/how-gamestop-missed-out-on-capitalising-on-the-reddit-rally-362984">How GameStop missed out on capitalising on the Reddit rally</a>

Gill is the only non-chief executive who will appear at the event, titled “Game Stopped? Who Wins and Loses When Short Sellers, Social Media and Retail Investors Collide.”

The other people testifying that day will be Vlad Tenev, CEO of online broker Robinhood; Kenneth C. Griffin, CEO of trading firm Citadel; Gabe Plotkin, CEO of hedge fund Melvin Capital Management; and Steve Huffman, CEO of social media company Reddit.

Gill lingered in anonymity until he was outed last month as the person behind Roaring Kitty. Under that screen name, Gill shot dozens of videos from his home in Massachusetts promoting the GameStop stock.

Also read|&nbsp;<a href="https://www.wionews.com/entertainment/hbo-to-develop-film-chronicling-the-gamestop-wall-street-incident-361954">HBO to develop film chronicling the GameStop-Wall Street incident</a>

He built up a large holding of GameStop shares and became a hero among the online crowd that gathered on Reddit to talk about the stock. But his endorsement has drawn attention from regulators in his home state.

Many of these traders bought and sold stocks on the Robinhood trading app. But Robinhood and other brokers effectively blocked trading of GameStop on its platform as the stock became the most actively traded on Wall Street, with its share price up as much as 1,700% in January.

The spike caused huge losses for the hedge funds that had made big bets against GameStop. Melvin lost 53% in January, a person familiar with the matter said, and had to ask for billions of dollars from other hedge funds, including Citadel, to stay afloat.

Robinhood’s decision to block trading infuriated its customers and drew bipartisan condemnation, with the unlikely combination of Rep. Alexandria Ocasio-Cortez and Sen. Ted Cruz agreeing on the issue.

Robinhood raised $3.4 billion in five days to ensure it had enough money to cover the trading on its platforms. Even so, the platform continued to limit trading of GameStop and other so-called meme stocks, such as AMC Entertainment, for days.

A young day trader who went by the screen name Roaring Kitty and found himself at the center of the GameStop stock trading frenzy will make his first public appearance at a congressional hearing Thursday.

A young day trader who went by the screen name Roaring Kitty and found himself at the center of the GameStop stock trading frenzy will make his first public appearance at a congressional hearing Thursday. The trader, Keith Gill, was on a list released Friday of the panel that will appear in front of the House Committee on Financial Services as it examines the circumstances around the wild spikes in prices of GameStop and other so-called meme stocks. Also read| How GameStop missed out on capitalising on the Reddit rally Gill is the only non-chief executive who will appear at the event, titled “Game Stopped? Who Wins and Loses When Short Sellers, Social Media and Retail Investors Collide.” The other people testifying that day will be Vlad Tenev, CEO of online broker Robinhood; Kenneth C. Griffin, CEO of trading firm Citadel; Gabe Plotkin, CEO of hedge fund Melvin Capital Management; and Steve Huffman, CEO of social media company Reddit. Gill lingered in anonymity until he was outed last month as the person behind Roaring Kitty. Under that screen name, Gill shot dozens of videos from his home in Massachusetts promoting the GameStop stock. Also read| HBO to develop film chronicling the GameStop-Wall Street incident He built up a large holding of GameStop shares and became a hero among the online crowd that gathered on Reddit to talk about the stock. But his endorsement has drawn attention from regulators in his home state. Many of these traders bought and sold stocks on the Robinhood trading app. But Robinhood and other brokers effectively blocked trading of GameStop on its platform as the stock became the most actively traded on Wall Street, with its share price up as much as 1,700% in January. The spike caused huge losses for the hedge funds that had made big bets against GameStop. Melvin lost 53% in January, a person familiar with the matter said, and had to ask for billions of dollars from other hedge funds, including Citadel, to stay afloat. Robinhood’s decision to block trading infuriated its customers and drew bipartisan condemnation, with the unlikely combination of Rep. Alexandria Ocasio-Cortez and Sen. Ted Cruz agreeing on the issue. Robinhood raised $3.4 billion in five days to ensure it had enough money to cover the trading on its platforms. Even so, the platform continued to limit trading of GameStop and other so-called meme stocks, such as AMC Entertainment, for days.

Reddit’s ‘Roaring Kitty’ will speak at GameStop hearing

A film describing the&nbsp;GameStop-Wall Street incident is in development at HBO.&nbsp;

The film is described as exploring how a populist uprising of social media day traders beat Wall Street at their own game, turning the stock market upside down and shaking the financial world to its core.&nbsp;According to The Hollywood Reporter, 'Billions'&nbsp;co-creator and financial journalist Andrew Ross Sorkin, Jason Blum, and former HBO Films head Len Amato are executive&nbsp;producing the project. The untitled show will follow the stock saga where hedge fund managers had bet on GameStop to lose a lot of value, but several scores of people in the wallstreetbets Reddit forum exchanged tips and bought the company's shares. 
 
<a href="https://www.wionews.com/business-economy/how-gamestop-stocks-surge-exposed-wall-street-elites-360171">How GameStop stocks surge exposed Wall Street elites</a>

This is the latest onscreen project set up to detail the ongoing stock market saga around GameStop. A feature documentary was announced recently, while earlier this week a feature film adaptation from writer Mark Boal ('The Hurt Locker,'&nbsp;'Zero Dark Thirty') was announced, with Noah Centineo set to star in a major role. MGM also recently picked up the rights to author Ben Mezrich’s book proposal, 'The Antisocial Network,'&nbsp;which also dives into the Wall Street fiasco. Grand Central Publishing plans to publish the book in the fall, according to Variety. 
 
<a href="https://www.wionews.com/business-economy/four-things-to-know-about-the-gamestop-insanity-359947?fbclid=IwAR1VWpWmbdqf9oIvDYuM_jIuxW8ea4kIbLNkV96mQNS_oKBmVVA3YTeJrEw">Four things to know about the GameStop insanity</a>

Sorkin is the co-creator of the Showtime drama “Billions,” which is set in the world of hedge funds. He is also the author of the 2008 financial crisis book “Too Big to Fail,” and co-produced a film adaptation previously for HBO Films, which was nominated for 11 Emmy Awards.

Amato is the former head of HBO Films. During his time there, HBO Films won 43 Emmy Awards and 12 Golden Globes, winning the Outstanding Made For Television Movie Emmy in 2009, 2010, 2012, 2013, 2014, and 2015. Amato also developed and executive produced 2008’s “Recount,” which garnered 3 Emmy Awards including Best Made for Television Movie, and resulted in an Emmy for Amato as executive producer.

 
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A film describing the GameStop-Wall Street incident is in development at HBO. The film is described as exploring how a populist uprising of social media day traders beat Wall Street at their own game, turning the stock market upside down and shaking the financial world to its core.

A film describing the GameStop-Wall Street incident is in development at HBO. The film is described as exploring how a populist uprising of social media day traders beat Wall Street at their own game, turning the stock market upside down and shaking the financial world to its core. According to The Hollywood Reporter, 'Billions' co-creator and financial journalist Andrew Ross Sorkin, Jason Blum, and former HBO Films head Len Amato are executive producing the project. The untitled show will follow the stock saga where hedge fund managers had bet on GameStop to lose a lot of value, but several scores of people in the wallstreetbets Reddit forum exchanged tips and bought the company's shares. How GameStop stocks surge exposed Wall Street elites This is the latest onscreen project set up to detail the ongoing stock market saga around GameStop. A feature documentary was announced recently, while earlier this week a feature film adaptation from writer Mark Boal ('The Hurt Locker,' 'Zero Dark Thirty') was announced, with Noah Centineo set to star in a major role. MGM also recently picked up the rights to author Ben Mezrich’s book proposal, 'The Antisocial Network,' which also dives into the Wall Street fiasco. Grand Central Publishing plans to publish the book in the fall, according to Variety. Four things to know about the GameStop insanity Sorkin is the co-creator of the Showtime drama “Billions,” which is set in the world of hedge funds. He is also the author of the 2008 financial crisis book “Too Big to Fail,” and co-produced a film adaptation previously for HBO Films, which was nominated for 11 Emmy Awards. Amato is the former head of HBO Films. During his time there, HBO Films won 43 Emmy Awards and 12 Golden Globes, winning the Outstanding Made For Television Movie Emmy in 2009, 2010, 2012, 2013, 2014, and 2015. Amato also developed and executive produced 2008’s “Recount,” which garnered 3 Emmy Awards including Best Made for Television Movie, and resulted in an Emmy for Amato as executive producer.

HBO to develop film chronicling the GameStop-Wall Street incident

It is Occupy Wall Street, the sequel. It is elements of the Tea Party, again. It is Bernie bros and MAGA maniacs.

The hordes of young traders who this week fueled a spectacular surge in the value of video game retailer GameStop may lack a unified political ideology. But they have forced a reckoning on Wall Street and caught the attention of leaders in Washington who recognize a populist uprising when they see one.

Wall Street has long been an easy villain for many on Capitol Hill. But the rush to side with speculative traders by both Democrats and Republicans reflects the broad recognition of the impulses that have driven U.S. politics in recent years, fueling both the ascension of President Donald Trump and a liberal wing of the Democratic Party that grew stronger in opposition.

Also read|&nbsp;<a href="https://www.wionews.com/world/trading-curbs-reverse-gamestop-rally-angering-upstart-traders-360011">Trading curbs reverse GameStop rally, angering upstart traders</a>

The decision by online brokerage app Robinhood to impose trading limits as hedge funds were hammered by the wild market fluctuation has prompted the rarest of all political occurrences: bipartisan agreement. Lawmakers from across the political spectrum condemned the move and called for hearings into the decision — among them Sen. Ted Cruz, R-Texas, a staunch conservative; and Rep. Alexandria Ocasio-Cortez, D-N.Y., a standard-bearer of the left. The conservative attorney general of Texas and his progressive counterpart in New York have both initiated inquiries into Robinhood.

“For years, the stock market has been less and less about the value of business and more and more like casino gambling,” said Sen. Elizabeth Warren, D-Mass., who called for increased regulation of Wall Street shortly after the market frenzy over GameStop began this week.

“GameStop is just the latest and most visible example,” she said in an interview Friday. “We need to take this not as a one-off problem but as a systemic problem that requires systemic regulation and enforcement.”

While President Joe Biden defeated Trump with a centrist message of restoring political norms, the trading frenzy this week provided a potent reminder of the strong undercurrent of grievance and institutional distrust in the country. Many believe that will only intensify as the nation wrestles with the economic fallout from a devastating pandemic.

Also read|&nbsp;<a href="https://www.wionews.com/business-economy/how-gamestop-stocks-surge-exposed-wall-street-elites-360171">How GameStop stocks surge exposed Wall Street elites</a>

As Wall Street booms, unemployment has hit record highs, with nearly 10 million fewer people holding jobs than at the beginning of last year — a situation that reminds some former officials of the 2008 economic crisis that led to both the Occupy Wall Street and the Tea Party movements.

“It’s not about Republicans and Democrats,” said Newt Gingrich, the former Republican House Speaker and an ally of Trump. “It’s lots and lots of normal, everyday people who began to figure out they really got ripped off for the last year just like they got ripped off in 2008 and 2009. What you’re seeing is an almost spontaneous cultural reaction in which the little guys and gals are getting together and going after the bigs, so the bigs are having to rig the game in order to survive.”

The reality is more complicated. There is little sign of any central political mission shared by the millions of amateur traders who combined to squeeze at least two hedge funds that bet against the stocks of companies like GameStop and movie chain AMC. One of the originators of the scheme is far from a “little guy,” with the financial resources to have purportedly transformed an initial investment of $53,000 into $48 million. Overall, only about half the country owns any stock at all.

On Reddit, the online message board that helped fuel the surge, few of the mostly young participants frame their flood of investments in clearly partisan terms. Yet many write of being driven by anger over the 2008 financial bailouts that kept the big banks afloat while 10 million Americans lost their homes.

“When that crisis hit our family, we were able to keep our little house, but we lived off of pancake mix, and powdered milk, and beans and rice for a year,” one person identified as ssauronn posted on Reddit. “Your ilk were bailed out and rewarded for terrible and illegal financial decisions that negatively changed the lives of millions.”

Other posters responded with their own stories of economic struggle and political rage.

Also read|&nbsp;<a href="https://www.wionews.com/technology/gamestop-prompts-surge-in-hyper-rally-after-elon-musks-tweet-359791">GameStop prompts surge in hyper-rally after Elon Musk's tweet</a>

“Forget republican/democrat, left/right... the bankers play both sides and have almost always come out on top,” a poster identified as ChrisFrettJunior wrote, after recounting watching his parents struggle through the 2008 recession.

The decision to bail out the biggest banks and also decline to prosecute any of their top executives led to much of the populist fervor that has driven U.S. politics in the past decade. The Tea Party surged to political prominence in the wake of the $700 billion financial rescue package that passed in 2008, eventually becoming a force that defeated both moderate Republicans and Democrats.

After Republicans won control of the House in 2010, Democrats began to face their own backlash, beginning with Occupy Wall Street — a loose coalition of largely liberal protesters who fueled a national conversation about economic inequality.

These days, political strategists warn, hedge funds, private equity investors and bankers are unlikely to find the same kind of deep support in Washington. Anger over the bailouts fueled the campaigns of political outsiders, creating a Congress that is less receptive to the pleas of Wall Street and far more eager to make use of upheaval to advance their agendas.

“There’s a ton of political currency in holding hedge funds’ feet to the fire from Democrats and Republicans,” said Josh Holmes, a Republican strategist and longtime adviser to Sen. Mitch McConnell, R-Ky. “If you’re sitting on Wall Street looking at this, dismissing people as folks who don’t understand the way that the markets work, I think you’re going to be in a lot of trouble.”

For Republicans, the market upheaval was a referendum on elitism. Democrats saw pure corporate greed and the need for greater regulation.

“Big Hedge, with outposts in South Hedge-i-stan (Wall Street) and North Hedge-i-stan (Greenwich, CT), has made trillions shorting great American companies facing a rough patch,” said Rep. Jeff Fortenberry, R-Neb. “Now they are getting a comeuppance from flash mobs of day traders and are paying dearly.”

Most of the ire this week was directed at Robinhood, a brokerage app catering to younger investors, which suddenly limited trading in GameStop, AMC and other stocks. Lawmakers argued that the app was protecting hedge funds and other big investors over retail investors. Robinhood said the additional restrictions were necessary to comply with government financial requirements.

Yet even centrists like Sen. Pat Toomey, R-Pa., who is poised to become the top Republican on the Senate Banking Committee, expressed concerns about the lack of transparency in the online company’s decision-making.

“I find it disturbing when retail investors who are simply seeking to buy a stock are frozen out of the market,” Toomey said in a statement. “Retail investors should be free to purchase even highly speculative stocks, just as hedge funds should be free to short them.”

Although politicians from both sides joined calls for greater scrutiny, it was hardly a kumbaya moment for the two parties.

After Cruz tweeted that he agreed with Ocasio-Cortez’s call for a probe into Robinhood’s action, she quickly disavowed any support from Cruz, who was a prominent backer of Trump’s baseless claims of election fraud.

“I am happy to work with Republicans on this issue where there’s common ground, but you almost had me murdered 3 weeks ago so you can sit this one out,” she responded. “Happy to work w/ almost any other GOP that aren’t trying to get me killed. In the meantime if you want to help, you can resign.”

Cruz condemned her response as “partisan anger” that’s “not healthy for our country,” drawing another response from Ocasio-Cortez, while his allies in the House called for an apology.

The uproar over GameStop and Robinhood comes at a challenging time for the Biden administration, which took office promising to restore a sense of calm to the country. The Senate Banking Committee has yet to schedule a hearing to confirm Gary Gensler, Biden’s pick to lead the Securities and Exchange Commission, leaving the agency with an acting chair for the indefinite future. On Friday the White House press secretary, Jen Psaki, deferred questions on the issue.

“It’s a good reminder, though, that the stock market isn’t the only measure of the health of our economy,” she said, an apparent reference to Trump’s persistent fixation on stock prices during his tenure. Biden has not yet commented on the issue.

Rep. Ro Khanna, D-Calif., a progressive who represents a district that includes Silicon Valley, said this week’s events should alert lawmakers to the need to tighten financial regulations and increase transparency and equity.

He said the wide range of Republicans and Democrats who have spoken out are a reflection of “a real populist anger in this country.”

“Some people go get fancy degrees, know the right people and spend all day in front of their computers short selling, Khanna said. “And it’s a form of manipulation that has hurt our country. That has enriched the few at the expense of many Americans.”

Although many Americans own no stock at all, the sense that Wall Street has gamed a rigged system cuts across demographic barriers, he argued.

“I think this has been bubbling up since the Wall Street crash of 2008,” Khanna said. “And it’s coming to a boiling point.”

It is Occupy Wall Street, the sequel. It is elements of the Tea Party, again. It is Bernie bros and MAGA maniacs. The hordes of young traders who this week fueled a spectacular surge in the value of video game retailer GameStop may lack a unified political ideology.

It is Occupy Wall Street, the sequel. It is elements of the Tea Party, again. It is Bernie bros and MAGA maniacs. The hordes of young traders who this week fueled a spectacular surge in the value of video game retailer GameStop may lack a unified political ideology. But they have forced a reckoning on Wall Street and caught the attention of leaders in Washington who recognize a populist uprising when they see one. Wall Street has long been an easy villain for many on Capitol Hill. But the rush to side with speculative traders by both Democrats and Republicans reflects the broad recognition of the impulses that have driven U.S. politics in recent years, fueling both the ascension of President Donald Trump and a liberal wing of the Democratic Party that grew stronger in opposition. Also read| Trading curbs reverse GameStop rally, angering upstart traders The decision by online brokerage app Robinhood to impose trading limits as hedge funds were hammered by the wild market fluctuation has prompted the rarest of all political occurrences: bipartisan agreement. Lawmakers from across the political spectrum condemned the move and called for hearings into the decision — among them Sen. Ted Cruz, R-Texas, a staunch conservative; and Rep. Alexandria Ocasio-Cortez, D-N.Y., a standard-bearer of the left. The conservative attorney general of Texas and his progressive counterpart in New York have both initiated inquiries into Robinhood. “For years, the stock market has been less and less about the value of business and more and more like casino gambling,” said Sen. Elizabeth Warren, D-Mass., who called for increased regulation of Wall Street shortly after the market frenzy over GameStop began this week. “GameStop is just the latest and most visible example,” she said in an interview Friday. “We need to take this not as a one-off problem but as a systemic problem that requires systemic regulation and enforcement.” While President Joe Biden defeated Trump with a centrist message of restoring political norms, the trading frenzy this week provided a potent reminder of the strong undercurrent of grievance and institutional distrust in the country. Many believe that will only intensify as the nation wrestles with the economic fallout from a devastating pandemic. Also read| How GameStop stocks surge exposed Wall Street elites As Wall Street booms, unemployment has hit record highs, with nearly 10 million fewer people holding jobs than at the beginning of last year — a situation that reminds some former officials of the 2008 economic crisis that led to both the Occupy Wall Street and the Tea Party movements. “It’s not about Republicans and Democrats,” said Newt Gingrich, the former Republican House Speaker and an ally of Trump. “It’s lots and lots of normal, everyday people who began to figure out they really got ripped off for the last year just like they got ripped off in 2008 and 2009. What you’re seeing is an almost spontaneous cultural reaction in which the little guys and gals are getting together and going after the bigs, so the bigs are having to rig the game in order to survive.” The reality is more complicated. There is little sign of any central political mission shared by the millions of amateur traders who combined to squeeze at least two hedge funds that bet against the stocks of companies like GameStop and movie chain AMC. One of the originators of the scheme is far from a “little guy,” with the financial resources to have purportedly transformed an initial investment of $53,000 into $48 million. Overall, only about half the country owns any stock at all. On Reddit, the online message board that helped fuel the surge, few of the mostly young participants frame their flood of investments in clearly partisan terms. Yet many write of being driven by anger over the 2008 financial bailouts that kept the big banks afloat while 10 million Americans lost their homes. “When that crisis hit our family, we were able to keep our little house, but we lived off of pancake mix, and powdered milk, and beans and rice for a year,” one person identified as ssauronn posted on Reddit. “Your ilk were bailed out and rewarded for terrible and illegal financial decisions that negatively changed the lives of millions.” Other posters responded with their own stories of economic struggle and political rage. Also read| GameStop prompts surge in hyper-rally after Elon Musk's tweet “Forget republican/democrat, left/right... the bankers play both sides and have almost always come out on top,” a poster identified as ChrisFrettJunior wrote, after recounting watching his parents struggle through the 2008 recession. The decision to bail out the biggest banks and also decline to prosecute any of their top executives led to much of the populist fervor that has driven U.S. politics in the past decade. The Tea Party surged to political prominence in the wake of the $700 billion financial rescue package that passed in 2008, eventually becoming a force that defeated both moderate Republicans and Democrats. After Republicans won control of the House in 2010, Democrats began to face their own backlash, beginning with Occupy Wall Street — a loose coalition of largely liberal protesters who fueled a national conversation about economic inequality. These days, political strategists warn, hedge funds, private equity investors and bankers are unlikely to find the same kind of deep support in Washington. Anger over the bailouts fueled the campaigns of political outsiders, creating a Congress that is less receptive to the pleas of Wall Street and far more eager to make use of upheaval to advance their agendas. “There’s a ton of political currency in holding hedge funds’ feet to the fire from Democrats and Republicans,” said Josh Holmes, a Republican strategist and longtime adviser to Sen. Mitch McConnell, R-Ky. “If you’re sitting on Wall Street looking at this, dismissing people as folks who don’t understand the way that the markets work, I think you’re going to be in a lot of trouble.” For Republicans, the market upheaval was a referendum on elitism. Democrats saw pure corporate greed and the need for greater regulation. “Big Hedge, with outposts in South Hedge-i-stan (Wall Street) and North Hedge-i-stan (Greenwich, CT), has made trillions shorting great American companies facing a rough patch,” said Rep. Jeff Fortenberry, R-Neb. “Now they are getting a comeuppance from flash mobs of day traders and are paying dearly.” Most of the ire this week was directed at Robinhood, a brokerage app catering to younger investors, which suddenly limited trading in GameStop, AMC and other stocks. Lawmakers argued that the app was protecting hedge funds and other big investors over retail investors. Robinhood said the additional restrictions were necessary to comply with government financial requirements. Yet even centrists like Sen. Pat Toomey, R-Pa., who is poised to become the top Republican on the Senate Banking Committee, expressed concerns about the lack of transparency in the online company’s decision-making. “I find it disturbing when retail investors who are simply seeking to buy a stock are frozen out of the market,” Toomey said in a statement. “Retail investors should be free to purchase even highly speculative stocks, just as hedge funds should be free to short them.” Although politicians from both sides joined calls for greater scrutiny, it was hardly a kumbaya moment for the two parties. After Cruz tweeted that he agreed with Ocasio-Cortez’s call for a probe into Robinhood’s action, she quickly disavowed any support from Cruz, who was a prominent backer of Trump’s baseless claims of election fraud. “I am happy to work with Republicans on this issue where there’s common ground, but you almost had me murdered 3 weeks ago so you can sit this one out,” she responded. “Happy to work w/ almost any other GOP that aren’t trying to get me killed. In the meantime if you want to help, you can resign.” Cruz condemned her response as “partisan anger” that’s “not healthy for our country,” drawing another response from Ocasio-Cortez, while his allies in the House called for an apology. The uproar over GameStop and Robinhood comes at a challenging time for the Biden administration, which took office promising to restore a sense of calm to the country. The Senate Banking Committee has yet to schedule a hearing to confirm Gary Gensler, Biden’s pick to lead the Securities and Exchange Commission, leaving the agency with an acting chair for the indefinite future. On Friday the White House press secretary, Jen Psaki, deferred questions on the issue. “It’s a good reminder, though, that the stock market isn’t the only measure of the health of our economy,” she said, an apparent reference to Trump’s persistent fixation on stock prices during his tenure. Biden has not yet commented on the issue. Rep. Ro Khanna, D-Calif., a progressive who represents a district that includes Silicon Valley, said this week’s events should alert lawmakers to the need to tighten financial regulations and increase transparency and equity. He said the wide range of Republicans and Democrats who have spoken out are a reflection of “a real populist anger in this country.” “Some people go get fancy degrees, know the right people and spend all day in front of their computers short selling, Khanna said. “And it’s a form of manipulation that has hurt our country. That has enriched the few at the expense of many Americans.” Although many Americans own no stock at all, the sense that Wall Street has gamed a rigged system cuts across demographic barriers, he argued. “I think this has been bubbling up since the Wall Street crash of 2008,” Khanna said. “And it’s coming to a boiling point.”

Lawmakers look at GameStop furor and see a populist issue to seize

GameStop is an American company and is on the verge of bankruptcy, however, its shares suddenly shot up by two thousand per cent in four days not because the company suddenly began doing well.

The astronomical jump was driven by a group of Netizens who were out to teach the bankers at Wall Street a lesson.

On January 25, one share of American company GameStop corp was selling at close to $43, however, on January the price shot up to $469 - a whopping jump of more than two thousand per cent in four days.

GameStop is one of the world's biggest video game retailers but on Wall Street the market for GameStop stock is a battleground between financial elite and small investors which is exactly what some of the major hedge funds wanted to do with GameStop that is bet on the decline of the company to make money.

In other words, selling short but these Wall Street traders got torched by this trade. Short sellers lost more than $5 billion betting against GameStop which includes names like point72 asset management that lost nearly 15 per cent of its fund over this trade.

Andrew Left's Citron capital suffered a loss of 100 per cent over the Gamestop trade, Melvin Capital needed a $2.8 billion injection to save itself. The big traders were defeated at their own game by small traders.

It all began with Wall Street bets an internet forum on Reddit that decided to teach Wall Street a lesson after online traders, mom-and-pop investors and small brokers decided to buy GameStop shares. For many of these traders this was about punishing Wall Street for the financial collapse of 2008.

An army of small investors pushed the stock to record highs leading to a massive jump in Gamestop's market value from $2 billion to $24 billion while the big investors saw the money they bet against GameStop evaporate.

The volatile trading led to high drama forcing the Biden administration and the US Securities and Exchange Commission to start monitoring the situation.

Robinhood, the app used by many of the small investors to buy GameStop shares began blocking buys from fresh purchases. Some American lawmakers have now demanded an investigation into this halt. The bet against GameStop has left Wall Street traders burnt. The entire affair is a reminder that market investments remain a risky business.

GameStop is an American company and is on the verge of bankruptcy, however, its shares suddenly shot up by two thousand per cent in four days not because the company suddenly began doing well.

GameStop is an American company and is on the verge of bankruptcy, however, its shares suddenly shot up by two thousand per cent in four days not because the company suddenly began doing well. The astronomical jump was driven by a group of Netizens who were out to teach the bankers at Wall Street a lesson. On January 25, one share of American company GameStop corp was selling at close to $43, however, on January the price shot up to $469 - a whopping jump of more than two thousand per cent in four days. GameStop is one of the world's biggest video game retailers but on Wall Street the market for GameStop stock is a battleground between financial elite and small investors which is exactly what some of the major hedge funds wanted to do with GameStop that is bet on the decline of the company to make money. In other words, selling short but these Wall Street traders got torched by this trade. Short sellers lost more than $5 billion betting against GameStop which includes names like point72 asset management that lost nearly 15 per cent of its fund over this trade. Andrew Left's Citron capital suffered a loss of 100 per cent over the Gamestop trade, Melvin Capital needed a $2.8 billion injection to save itself. The big traders were defeated at their own game by small traders. It all began with Wall Street bets an internet forum on Reddit that decided to teach Wall Street a lesson after online traders, mom-and-pop investors and small brokers decided to buy GameStop shares. For many of these traders this was about punishing Wall Street for the financial collapse of 2008. An army of small investors pushed the stock to record highs leading to a massive jump in Gamestop's market value from $2 billion to $24 billion while the big investors saw the money they bet against GameStop evaporate. The volatile trading led to high drama forcing the Biden administration and the US Securities and Exchange Commission to start monitoring the situation. Robinhood, the app used by many of the small investors to buy GameStop shares began blocking buys from fresh purchases. Some American lawmakers have now demanded an investigation into this halt. The bet against GameStop has left Wall Street traders burnt. The entire affair is a reminder that market investments remain a risky business.

How GameStop stocks surge exposed Wall Street elites

A day after GameStop shares rose 135% — a wild upswing spurred by an online army of investors on a mission to challenge the dominance of Wall Street — Robinhood, the stock-trading app at the center of it all, clamped down.

Almost immediately, GameStop’s shares plunged, falling 75% in 90 minutes.

The limits on trading by Robinhood and other online brokerages, put in place as fears of market instability grew more widespread, set off a furious outcry among small investors. They claimed that the very apps that had democratized trading — Robinhood in particular — were now doing the bidding of Wall Street.

Small groups of investors protested outside the New York Stock Exchange and at the Menlo Park, California, headquarters of Robinhood, a company that popularized the notion of commission-free trading. At least one aggrieved trader filed a lawsuit. Politicians on both the left and right weighed in. Before long, a trading strategy involving an obscure stock had morphed into a symbol of class warfare — pitting young upstarts against established Wall Street investors.

“You know the story of Robin Hood, this disenfranchised group of rebels stealing from the elite establishment and gifting that money to the poor,” said Travis Shetler, 21, a college student in Meadville, Pennsylvania, who bought shares of GameStop and Nokia in recent days. “The irony of an app like that pandering to the elite is quite obvious.”

Robinhood said the additional restrictions on trades of GameStop and some other companies were necessary to ensure it didn’t run afoul of government regulations. The curbs allowed users to only sell shares they owned and repurchase shares they had borrowed and sold, effectively halting the kinds of options bets that drove the rally. It also raised margin requirements for certain securities, meaning investors needed to keep more of their own money in their accounts when placing trades using funds they had borrowed from Robinhood. It later halted all margin trading involving GameStop and the movie theater chain AMC.

Webull, another trading app, said customers could only liquidate positions they already had in GameStop. Another, Interactive Brokers, put its own guardrails around several popular securities.

GameStop shares recovered some losses to end the day down 44%. The shares then rebounded significantly in the after-hours trading session, after Robinhood said it would “allow limited buys of these securities” on Friday. Many Robinhood customers used Twitter to post notices from the firm letting them know it had sold off some of their positions, without their permission. The firm said “unprecedented volatility” and an effort to help reduce risk may prompt it to sell certain shares and options contracts for GameStop and AMC.

Users were livid.

Daniel Li, a 22-year-old from Los Angeles County who bought GameStop stock two weeks ago, said Robinhood’s decision was “completely dishonest.”

“A lot of regular, hardworking Americans have been putting their money in hoping and praying they can get something out of it during a time when everyone is struggling,” he said. “It felt like it was not just a betrayal, but completely unethical in so many ways.”

The upheaval arrived at an inopportune time for Washington. With the Biden administration barely a week old, its nominee to be the next Securities and Exchange Commission chairman, Gary Gensler, has yet to have a hearing. And a standoff over the filibuster has delayed Congress’ attempts to organize itself into committees.

Sen. Sherrod Brown, D-Ohio, the incoming chairman of the Senate Banking Committee, responded to the market mayhem, vowing to hold a hearing on what he called the “broken” Wall Street system. “People on Wall Street only care about the rules when they’re the ones getting hurt,” he wrote on Twitter.

The restrictions placed on Robinhood traders even made allies of Rep. Alexandria Ocasio-Cortez, D-N.Y., and Sen. Ted Cruz, R-Texas — who have spent the past three weeks sparring over the violence at the Capitol on Jan. 6.

“We now need to know more about Robinhood’s decision to block retail investors from purchasing stock while hedge funds are freely able to trade the stock as they see fit,” Ocasio-Cortez wrote on Twitter. “As a member of the Financial Services Committee, I’d support a hearing if necessary.”

Cruz replied: “Fully agree.”

Though the trading platforms’ decision to curb speculative trading was deeply unpopular with casual traders, it was not unheard-of. Steps such as banning trading on margin — that is, using funds borrowed from your broker — are common for brokerages that face growing risks from volatile securities that are in the midst of a price spike. Through the end of trading Wednesday, GameStop’s stock was up 1,700% in January alone.

Robinhood, a firm backed by venture capital, said it had decided to limit the buying of securities like GameStop because of the regulations that govern it, including capital obligations mandated by the SEC, rather than pressure from Wall Street.

“To be clear, this was a risk-management decision, and was not made on the direction of the market makers we route to,” the company said in a statement. “We’re beginning to open up trading for some of these securities in a responsible manner.”

This week’s trading spree forced Robinhood to draw down on a line of credit of between $500 million and $600 million from six big Wall Street banks Thursday, most likely because it needs more cash to cover heightened margin requirements imposed by the central clearing facility for stock trades, a person familiar with the matter said. A spokesperson for the central clearing facility, the Depository Trust &amp;amp; Clearing Corp., confirmed that the clearinghouse had indeed increased its margin requirements.

Several hedge funds on the losing side of these trades have also struggled in recent days.

Large hedge funds, which often copy one another’s trades, wagered that the future prospects of companies like GameStop, AMC Entertainment and others were dim, and engaged in short-selling — a kind of trade where they would make money if those companies’ shares fell. But because small investors began taking the opposite side of the trade, egging on one another via message boards and buying up shares and options of those companies, their share prices rose instead.

As prices soared, those hedge funds were forced to absorb losses on their soured wagers. But the effects won’t necessarily stop there. If they’re battered badly enough, these funds could be forced to sell off shares in other companies to cover their losses — setting off a market downturn that would eventually ripple through businesses far removed from the action. As the GameStop saga played out, the S&amp;amp;P 500 suffered its largest daily decline in months Wednesday, falling 2.6%.

“The contagion risk is simple: There’s a bunch of hedge funds out there and they’re all doing the same things,” said Nathan Koppikar, a portfolio manager at the San Francisco short-selling fund Orso Partners.

In recent days, with GameStop shares soaring toward $500, phones on Wall Street were buzzing with texts sharing rumors about double-digit losses at a number of large hedge funds affected by the squeeze, say traders who received them.

While Melvin Capital, which needed a $2.75 billion infusion from the money managers Point72 and Citadel on Monday, appeared to be the worst hit, Point72 itself was also suffering. By the time markets closed Wednesday, returns at the firm, which is run by billionaire New York Mets owner Steven Cohen, had fallen nearly 15% year to date, according to a person with knowledge of the results. Part of the problem: A long-standing investment of roughly $1 billion that Point72 had made in Melvin, which manages money on Point72’s behalf.

That same evening, returns at Citadel, the large Chicago asset-management firm, were down by single digits, according to a person familiar with Citadel’s results. Citadel was also exposed to the market turmoil through its separate securities division, where it executes orders to buy and sell stock from Robinhood customers as part of an arrangement in which it, and other firms, pay the online brokerage firm for access to orders.

The situation facing the hedge funds is akin to a classic short squeeze: The amateur investors are pushing up the price of a stock the big players have bet against. And the pressure to avoid losses could force the shorts to buy, further driving up the price and making the casual traders a mint.

Even after Thursday’s fall tested their nerves, users in the online forums that launched GameStop’s improbable rise — like the Wall Street Bets forum on Reddit — encouraged one another to stay strong and hold their positions.

That’s the plan for Shawn Daumer, 19, a real estate agent in Valparaiso, Indiana, who put about $40,000 into shares of GameStop on Jan. 19. By the end of the day Wednesday, he was more than $420,000 in the black.

Thursday, however, was a different story: On paper, he lost nearly $200,000.

“I’m still up 500%,” Daumer said. “I’m OK.”

And he had no intention of selling GameStop, which had soared to as high as $483 on Thursday, before tumbling to settle at $193.60. The price, he said, would rise again — if all goes well.

“We’re going to $1,000,” he said.

A day after GameStop shares rose 135% — a wild upswing spurred by an online army of investors on a mission to challenge the dominance of Wall Street — Robinhood, the stock-trading app at the center of it all, clamped down.

A day after GameStop shares rose 135% — a wild upswing spurred by an online army of investors on a mission to challenge the dominance of Wall Street — Robinhood, the stock-trading app at the center of it all, clamped down. Almost immediately, GameStop’s shares plunged, falling 75% in 90 minutes. The limits on trading by Robinhood and other online brokerages, put in place as fears of market instability grew more widespread, set off a furious outcry among small investors. They claimed that the very apps that had democratized trading — Robinhood in particular — were now doing the bidding of Wall Street. Small groups of investors protested outside the New York Stock Exchange and at the Menlo Park, California, headquarters of Robinhood, a company that popularized the notion of commission-free trading. At least one aggrieved trader filed a lawsuit. Politicians on both the left and right weighed in. Before long, a trading strategy involving an obscure stock had morphed into a symbol of class warfare — pitting young upstarts against established Wall Street investors. “You know the story of Robin Hood, this disenfranchised group of rebels stealing from the elite establishment and gifting that money to the poor,” said Travis Shetler, 21, a college student in Meadville, Pennsylvania, who bought shares of GameStop and Nokia in recent days. “The irony of an app like that pandering to the elite is quite obvious.” Robinhood said the additional restrictions on trades of GameStop and some other companies were necessary to ensure it didn’t run afoul of government regulations. The curbs allowed users to only sell shares they owned and repurchase shares they had borrowed and sold, effectively halting the kinds of options bets that drove the rally. It also raised margin requirements for certain securities, meaning investors needed to keep more of their own money in their accounts when placing trades using funds they had borrowed from Robinhood. It later halted all margin trading involving GameStop and the movie theater chain AMC. Webull, another trading app, said customers could only liquidate positions they already had in GameStop. Another, Interactive Brokers, put its own guardrails around several popular securities. GameStop shares recovered some losses to end the day down 44%. The shares then rebounded significantly in the after-hours trading session, after Robinhood said it would “allow limited buys of these securities” on Friday. Many Robinhood customers used Twitter to post notices from the firm letting them know it had sold off some of their positions, without their permission. The firm said “unprecedented volatility” and an effort to help reduce risk may prompt it to sell certain shares and options contracts for GameStop and AMC. Users were livid. Daniel Li, a 22-year-old from Los Angeles County who bought GameStop stock two weeks ago, said Robinhood’s decision was “completely dishonest.” “A lot of regular, hardworking Americans have been putting their money in hoping and praying they can get something out of it during a time when everyone is struggling,” he said. “It felt like it was not just a betrayal, but completely unethical in so many ways.” The upheaval arrived at an inopportune time for Washington. With the Biden administration barely a week old, its nominee to be the next Securities and Exchange Commission chairman, Gary Gensler, has yet to have a hearing. And a standoff over the filibuster has delayed Congress’ attempts to organize itself into committees. Sen. Sherrod Brown, D-Ohio, the incoming chairman of the Senate Banking Committee, responded to the market mayhem, vowing to hold a hearing on what he called the “broken” Wall Street system. “People on Wall Street only care about the rules when they’re the ones getting hurt,” he wrote on Twitter. The restrictions placed on Robinhood traders even made allies of Rep. Alexandria Ocasio-Cortez, D-N.Y., and Sen. Ted Cruz, R-Texas — who have spent the past three weeks sparring over the violence at the Capitol on Jan. 6. “We now need to know more about Robinhood’s decision to block retail investors from purchasing stock while hedge funds are freely able to trade the stock as they see fit,” Ocasio-Cortez wrote on Twitter. “As a member of the Financial Services Committee, I’d support a hearing if necessary.” Cruz replied: “Fully agree.” Though the trading platforms’ decision to curb speculative trading was deeply unpopular with casual traders, it was not unheard-of. Steps such as banning trading on margin — that is, using funds borrowed from your broker — are common for brokerages that face growing risks from volatile securities that are in the midst of a price spike. Through the end of trading Wednesday, GameStop’s stock was up 1,700% in January alone. Robinhood, a firm backed by venture capital, said it had decided to limit the buying of securities like GameStop because of the regulations that govern it, including capital obligations mandated by the SEC, rather than pressure from Wall Street. “To be clear, this was a risk-management decision, and was not made on the direction of the market makers we route to,” the company said in a statement. “We’re beginning to open up trading for some of these securities in a responsible manner.” This week’s trading spree forced Robinhood to draw down on a line of credit of between $500 million and $600 million from six big Wall Street banks Thursday, most likely because it needs more cash to cover heightened margin requirements imposed by the central clearing facility for stock trades, a person familiar with the matter said. A spokesperson for the central clearing facility, the Depository Trust &amp; Clearing Corp., confirmed that the clearinghouse had indeed increased its margin requirements. Several hedge funds on the losing side of these trades have also struggled in recent days. Large hedge funds, which often copy one another’s trades, wagered that the future prospects of companies like GameStop, AMC Entertainment and others were dim, and engaged in short-selling — a kind of trade where they would make money if those companies’ shares fell. But because small investors began taking the opposite side of the trade, egging on one another via message boards and buying up shares and options of those companies, their share prices rose instead. As prices soared, those hedge funds were forced to absorb losses on their soured wagers. But the effects won’t necessarily stop there. If they’re battered badly enough, these funds could be forced to sell off shares in other companies to cover their losses — setting off a market downturn that would eventually ripple through businesses far removed from the action. As the GameStop saga played out, the S&amp;P 500 suffered its largest daily decline in months Wednesday, falling 2.6%. “The contagion risk is simple: There’s a bunch of hedge funds out there and they’re all doing the same things,” said Nathan Koppikar, a portfolio manager at the San Francisco short-selling fund Orso Partners. In recent days, with GameStop shares soaring toward $500, phones on Wall Street were buzzing with texts sharing rumors about double-digit losses at a number of large hedge funds affected by the squeeze, say traders who received them. While Melvin Capital, which needed a $2.75 billion infusion from the money managers Point72 and Citadel on Monday, appeared to be the worst hit, Point72 itself was also suffering. By the time markets closed Wednesday, returns at the firm, which is run by billionaire New York Mets owner Steven Cohen, had fallen nearly 15% year to date, according to a person with knowledge of the results. Part of the problem: A long-standing investment of roughly $1 billion that Point72 had made in Melvin, which manages money on Point72’s behalf. That same evening, returns at Citadel, the large Chicago asset-management firm, were down by single digits, according to a person familiar with Citadel’s results. Citadel was also exposed to the market turmoil through its separate securities division, where it executes orders to buy and sell stock from Robinhood customers as part of an arrangement in which it, and other firms, pay the online brokerage firm for access to orders. The situation facing the hedge funds is akin to a classic short squeeze: The amateur investors are pushing up the price of a stock the big players have bet against. And the pressure to avoid losses could force the shorts to buy, further driving up the price and making the casual traders a mint. Even after Thursday’s fall tested their nerves, users in the online forums that launched GameStop’s improbable rise — like the Wall Street Bets forum on Reddit — encouraged one another to stay strong and hold their positions. That’s the plan for Shawn Daumer, 19, a real estate agent in Valparaiso, Indiana, who put about $40,000 into shares of GameStop on Jan. 19. By the end of the day Wednesday, he was more than $420,000 in the black. Thursday, however, was a different story: On paper, he lost nearly $200,000. “I’m still up 500%,” Daumer said. “I’m OK.” And he had no intention of selling GameStop, which had soared to as high as $483 on Thursday, before tumbling to settle at $193.60. The price, he said, would rise again — if all goes well. “We’re going to $1,000,” he said.

Trading curbs reverse GameStop rally, angering upstart traders

Facebook Inc took down a popular Wall Street discussion group, Robinhood Stock Traders, in a move that its founder on Thursday described as backlash for conversations buoying shares of GameStop Corp and other companies this week.

GameStop, AMC Entertainment Holdings Inc and BlackBerry have been at the centre of a market battle as individual investors coordinating on social media including Reddit, and using trading apps such as Robinhood, bought shares and squeezed hedge funds that had bet big on those struggling companies to the tank.

Allen Tran, a 23-year-old from Chicago who created Robinhood Stock Traders, said he woke up on Wednesday to a notification that Facebook had disabled the 157,000-member group. The notification, seen by Reuters, said without detail that the group violated policies on "adult sexual exploitation."

"We were first on the picking tree to be cut off because we are on Facebook, not a free platform like Reddit," said Tran, referring to the typically lighter moderation on the discussion website.

Some of his group's members made tens of thousands of dollars in recent trades first popularized on Reddit's WallStreetBets forum, he said.

Tran, who also runs the 20,000-member HaiKhuu Trading group on chat app Discord, said he has never seen adult content on the Facebook group.

Facebook confirmed its removal but did not immediately have further comment.

Tran said institutional investors are trying to separate retail traders.

Facebook suspended his group on Jan. 7 after labelling it a "dangerous organization," according to correspondence seen by Reuters, though the company reinstated its privileges after he appealed to contacts there.

"With all these major institutions being frustrated with the success of retail, they are trying to target any groups they can," said Tran, who was featured in a Wall Street Journal article in November and described his Facebook group as the largest of its kind.

Tran expressed concern that a replacement group he formed to carry on discussions also will be taken down.

Facebook Inc took down a popular Wall Street discussion group, Robinhood Stock Traders, in a move that its founder on Thursday described as backlash for conversations buoying shares of GameStop Corp and other companies this week.

Facebook Inc took down a popular Wall Street discussion group, Robinhood Stock Traders, in a move that its founder on Thursday described as backlash for conversations buoying shares of GameStop Corp and other companies this week. GameStop, AMC Entertainment Holdings Inc and BlackBerry have been at the centre of a market battle as individual investors coordinating on social media including Reddit, and using trading apps such as Robinhood, bought shares and squeezed hedge funds that had bet big on those struggling companies to the tank. Allen Tran, a 23-year-old from Chicago who created Robinhood Stock Traders, said he woke up on Wednesday to a notification that Facebook had disabled the 157,000-member group. The notification, seen by Reuters, said without detail that the group violated policies on "adult sexual exploitation." "We were first on the picking tree to be cut off because we are on Facebook, not a free platform like Reddit," said Tran, referring to the typically lighter moderation on the discussion website. Some of his group's members made tens of thousands of dollars in recent trades first popularized on Reddit's WallStreetBets forum, he said. Tran, who also runs the 20,000-member HaiKhuu Trading group on chat app Discord, said he has never seen adult content on the Facebook group. Facebook confirmed its removal but did not immediately have further comment. Tran said institutional investors are trying to separate retail traders. Facebook suspended his group on Jan. 7 after labelling it a "dangerous organization," according to correspondence seen by Reuters, though the company reinstated its privileges after he appealed to contacts there. "With all these major institutions being frustrated with the success of retail, they are trying to target any groups they can," said Tran, who was featured in a Wall Street Journal article in November and described his Facebook group as the largest of its kind. Tran expressed concern that a replacement group he formed to carry on discussions also will be taken down.

Facebook shuts popular stock trading group Robinhood amid GameStop frenzy

The internet and stock market are aflame over GameStop, the video game retailer whose stock is suddenly the darling of day traders who are putting the squeeze on Wall Street’s big players.

The stakes are enormous: The surge in trading has driven GameStop’s value up by $10 billion. Since Tuesday.

GameStop — that feature of malls and shopping centers across the country — was worth about $2 billion in December. Now it is worth $24 billion, roughly the same as the meat giant Tyson and the fuel refiner Valero Energy. On paper, at least.

Exactly why has to do with a mix of traditional investing, rampant enthusiasm, stock-market mechanics and the belief that anyone with a Robinhood account can meme a fortune into existence.

What’s going on?

It’s called a short squeeze, and it involves investors betting on which way a stock will go — up or down. These bets are placed by buying stock options, which we’ll grossly oversimplify here.

Options allow an investor to make money even if the stock itself loses value. Investors who bet against a stock are called “shorts.” In GameStop’s case, the shorts include at least two big hedge funds.

Shorting a stock essentially means borrowing shares from a broker and selling them, with the agreement you’ll return the shares later. When the price falls, you buy back the shares and pocket the difference. But shorting a stock is risky — if the price rises, you can lose big.

Sometimes you just make a bad bet. But you can also lose if someone tries to push up the price by buying lots of shares, even though the company isn’t doing anything different.

This is the squeeze.

Shorts have to close their position — that is, buy up the shares they owe their brokers and return them. This demand kicks the stock higher, and a short who acts too late could be ruined.

Usually, these kinds of standoffs involve sophisticated Wall Street investors, for example when Bill Ackman squared off against two other billionaires — Daniel Loeb and Carl Icahn — over the dietary supplement maker Herbalife.

Why did GameStop’s stock start rising?

The amateurs started driving up the price.

Over the past year, armchair traders have surged into the market. Some smelled opportunity after stocks tumbled last spring, some were trying to scratch a gambling itch after sports leagues shut down, and for some it’s just a game — trying to ring up dollars instead of points. All this has been made easier by the free trades available through platforms like Robinhood and E-Trade.

Some of these enthusiastic amateurs are buying shares of GameStop, but many are placing their own options bets, on the opposite side of the shorts.

These bets involve contracts that give them the option to buy a stock at a certain price in the future. If the price rises, the trader can buy the stock at a bargain and sell it for a profit. (In practice, lots of traders just sell the options contract itself for a profit or loss instead of actually buying the shares, but this description suffices for our purposes.)

The brokers that sell the options contracts have to provide the shares if the trader wants to exercise the option. To mitigate their risk, they buy some of the shares they’d need. Normally, this small amount of demand doesn’t do much to the price.

But if enough traders bet big, the demand can push the stock up. If it goes high enough, the brokers who would be on the hook have to buy more shares, lest they get stuck having to buy a lot of expensive shares all at once.

That increases demand, which increases the stock’s price. Which means the brokers have to buy more shares, which means … You get the idea.

OK, but why GameStop?

You can put some of the blame on Reddit’s Wall Street Bets forum, one of the weirder places on the internet. Wall Street Bets, or WSB, is where armchair traders gather to share memes, commiserate over losses and share more memes. But they also trade tips and analysis that can go on for pages.

GameStop’s shares started to rise in December, after the founder of the pet-supply site Chewy.com bought a stake in the company and got a spot on its board. Slowly, the company gained the attention of WSB and traders who frequent the gamer-friendly social media service Discord.

The traders’ motivations vary widely. Some reason that GameStop’s shares are a good value. Others are just riding the wave. And others want to squeeze Melvin Capital, a hedge fund that was shorting GameStop. They’re the ones quoting Heath Ledger’s Joker character from “The Dark Knight”: “It’s not about the money, it’s about sending a message.”

But the aggressive maneuvers against the shorts aren’t necessarily limited to the amateurs. Wall Street’s big players know a good opportunity when they see it.

How does the GameStop squeeze end?

Nobody knows.

A spokesperson for Melvin Capital — which needed a $2.75 billion cash injection Monday because of the squeeze — said the firm had closed out of its short position. Andrew Left of Citron Research, another short, said he had covered the majority of his short position “at a loss, 100%.”

There’s a catch: GameStop, as a company, is not noticeably different from a month ago. By any conventional measure, its share price wildly inflated — and extremely risky for whoever owns its shares.

But this isn’t just about GameStop anymore. Enthusiastic amateurs are also bidding up the prices of other struggling stocks, like movie theater chain AMC and smartphone maker BlackBerry.

This weird little bubble doesn’t just affect the bettors, though. If big investors on the losing side of these trades have to raise money to cover their losses, it could mean dumping enough shares to hurt the prices of otherwise solid stocks.

If the sell-off is big enough, it could have a cascading effect that leads to broader losses for investors who have never bought or sold a share of GameStop.

The internet and stock market are aflame over GameStop, the video game retailer whose stock is suddenly the darling of day traders who are putting the squeeze on Wall Street’s big players.

The internet and stock market are aflame over GameStop, the video game retailer whose stock is suddenly the darling of day traders who are putting the squeeze on Wall Street’s big players. The stakes are enormous: The surge in trading has driven GameStop’s value up by $10 billion. Since Tuesday. GameStop — that feature of malls and shopping centers across the country — was worth about $2 billion in December. Now it is worth $24 billion, roughly the same as the meat giant Tyson and the fuel refiner Valero Energy. On paper, at least. Exactly why has to do with a mix of traditional investing, rampant enthusiasm, stock-market mechanics and the belief that anyone with a Robinhood account can meme a fortune into existence. What’s going on? It’s called a short squeeze, and it involves investors betting on which way a stock will go — up or down. These bets are placed by buying stock options, which we’ll grossly oversimplify here. Options allow an investor to make money even if the stock itself loses value. Investors who bet against a stock are called “shorts.” In GameStop’s case, the shorts include at least two big hedge funds. Shorting a stock essentially means borrowing shares from a broker and selling them, with the agreement you’ll return the shares later. When the price falls, you buy back the shares and pocket the difference. But shorting a stock is risky — if the price rises, you can lose big. Sometimes you just make a bad bet. But you can also lose if someone tries to push up the price by buying lots of shares, even though the company isn’t doing anything different. This is the squeeze. Shorts have to close their position — that is, buy up the shares they owe their brokers and return them. This demand kicks the stock higher, and a short who acts too late could be ruined. Usually, these kinds of standoffs involve sophisticated Wall Street investors, for example when Bill Ackman squared off against two other billionaires — Daniel Loeb and Carl Icahn — over the dietary supplement maker Herbalife. Why did GameStop’s stock start rising? The amateurs started driving up the price. Over the past year, armchair traders have surged into the market. Some smelled opportunity after stocks tumbled last spring, some were trying to scratch a gambling itch after sports leagues shut down, and for some it’s just a game — trying to ring up dollars instead of points. All this has been made easier by the free trades available through platforms like Robinhood and E-Trade. Some of these enthusiastic amateurs are buying shares of GameStop, but many are placing their own options bets, on the opposite side of the shorts. These bets involve contracts that give them the option to buy a stock at a certain price in the future. If the price rises, the trader can buy the stock at a bargain and sell it for a profit. (In practice, lots of traders just sell the options contract itself for a profit or loss instead of actually buying the shares, but this description suffices for our purposes.) The brokers that sell the options contracts have to provide the shares if the trader wants to exercise the option. To mitigate their risk, they buy some of the shares they’d need. Normally, this small amount of demand doesn’t do much to the price. But if enough traders bet big, the demand can push the stock up. If it goes high enough, the brokers who would be on the hook have to buy more shares, lest they get stuck having to buy a lot of expensive shares all at once. That increases demand, which increases the stock’s price. Which means the brokers have to buy more shares, which means … You get the idea. OK, but why GameStop? You can put some of the blame on Reddit’s Wall Street Bets forum, one of the weirder places on the internet. Wall Street Bets, or WSB, is where armchair traders gather to share memes, commiserate over losses and share more memes. But they also trade tips and analysis that can go on for pages. GameStop’s shares started to rise in December, after the founder of the pet-supply site Chewy.com bought a stake in the company and got a spot on its board. Slowly, the company gained the attention of WSB and traders who frequent the gamer-friendly social media service Discord. The traders’ motivations vary widely. Some reason that GameStop’s shares are a good value. Others are just riding the wave. And others want to squeeze Melvin Capital, a hedge fund that was shorting GameStop. They’re the ones quoting Heath Ledger’s Joker character from “The Dark Knight”: “It’s not about the money, it’s about sending a message.” But the aggressive maneuvers against the shorts aren’t necessarily limited to the amateurs. Wall Street’s big players know a good opportunity when they see it. How does the GameStop squeeze end? Nobody knows. A spokesperson for Melvin Capital — which needed a $2.75 billion cash injection Monday because of the squeeze — said the firm had closed out of its short position. Andrew Left of Citron Research, another short, said he had covered the majority of his short position “at a loss, 100%.” There’s a catch: GameStop, as a company, is not noticeably different from a month ago. By any conventional measure, its share price wildly inflated — and extremely risky for whoever owns its shares. But this isn’t just about GameStop anymore. Enthusiastic amateurs are also bidding up the prices of other struggling stocks, like movie theater chain AMC and smartphone maker BlackBerry. This weird little bubble doesn’t just affect the bettors, though. If big investors on the losing side of these trades have to raise money to cover their losses, it could mean dumping enough shares to hurt the prices of otherwise solid stocks. If the sell-off is big enough, it could have a cascading effect that leads to broader losses for investors who have never bought or sold a share of GameStop.

Four things to know about the GameStop insanity

An epic battle is unfolding on Wall Street, with a cast of characters clashing over the fate of GameStop&nbsp;skyrocketing for a fourth straight day, thanks in part to&nbsp;Elon&nbsp;Musk.

Tesla founder Elon Musk, who has waged his own battle with short sellers before seeing spectacular gains for the electric carmaker, appeared to encourage the movement by tweeting a link to the Reddit forum along with the cryptic comment&nbsp;"Gamestonk!!"&nbsp;

"Stonks" is a tongue-in-cheek term for stocks widely used on social media.

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Gamestonk!! <a href="https://t.co/RZtkDzAewJ">https://t.co/RZtkDzAewJ</a>
— Elon Musk (@elonmusk) <a href="https://twitter.com/elonmusk/status/1354174279894642703?ref_src=twsrc%5Etfw">January 26, 2021</a></blockquote>
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Herds of amateur investors on Reddit have long been supporters of Tesla and other hyper-volatile stocks, and their influence appears to be growing.

'Short squeeze'

The WallStreetBets followers have been on a GameStop buying spree, which not only pushes up the shares but puts pressure on short sellers to make purchases to "cover" their bets to avoid steeper losses.

This is known on Wall Street as a "short squeeze" and can result in a dizzying rally by forcing short-sellers into becoming buyers.

As a result, GameStop surged 18 per cent on Monday, another 115 per cent Tuesday and had leapt 135 per cent Wednesday. That followed a stunning 50 per cent jump on Friday.

Short sellers, while reviled by some market players, are nonetheless seen as playing an important role in the markets by providing liquidity and driving down overpriced shares.&nbsp;

But at least one GameStop short-seller said he walked away from the stock after what he claimed was harassment and threats by an "angry mob."

As well as GameStop, BlackBerry, also favoured on Wallstreetbets, advanced 4.9&nbsp;per cent&nbsp;and is up 185&nbsp;per cent&nbsp;this year. An earlier tweet by&nbsp;Musk&nbsp;sent Etsy up almost 9% before it reversed its gains.

The surge in recent days - GameStop has increased more than seven-fold to $147.98 from $19 since January&nbsp;12 - has spurred concerns over bubbles in stocks that hedge funds and other speculative players had bet would fall in value.

Trading in GameStop stock was halted for volatility nine times on Monday and five times on Tuesday.

Why have GameStop shares been so volatile?

GameStop, a well-known retail chain whose business model of selling games on discs appears to have been overtaken by a move to the internet, has been the target of "short-sellers," often big hedge funds that bet on a decline by selling borrowed shares in the hope of repaying at a lower price.

But a group of amateur investors, organizing via the online platform Reddit, has fought the trend. A group calling itself WallStreetBets, with some three million members who exchange tips and boast about beating "the system," is credited with pushing up GameStop shares and roiling the Wall Street establishment.

Some analysts have described the situation as a "nerds vs Wall Street" battle.

Jaime Rogozinski, the founder of WallStreetBets, said the movement "is able to do what Occupy Wall Street was never able to do but on a completely different angle."

"Occupy Wall Street was fed up with this saying 'It's a game we can't play, you're forgetting the little guy.' Now the little guy figured out a different way around it," he said.

The WallStreetBets forum had restricted access to those outside its 3.6 million subscribers for a few hours Wednesday evening but was again visible to the public by 0115 GMT early Thursday.

Should regulators intervene?

The extreme volatility has raised concerns about manipulation, which could lead to an investigation by stock market regulators, and has even drawn attention from the White House.

"Our economic team including (Treasury) Secretary (Janet) Yellen and others are monitoring the situation," said White House spokeswoman Jen Psaki.

"It's a good reminder, though, that the stock market isn't the only measure of the health of our economy."

Late Wednesday, the Securities and Exchange Commission said it was monitoring the activity.

"We are aware of and actively monitoring the ongoing market volatility in the options and equities markets and... we are working with our fellow regulators to assess the situation and review the activities of regulated entities, financial intermediaries, and other market participants," an SEC statement said.

Jacob Frenkel, a former enforcement lawyer with the SEC, said the situation warrants regulatory review.

One option would be "a trading pause for 10 days to ensure that all investors would have access to accurate and timely information," Frenkel said.

Senator Elizabeth Warren also called for scrutiny.

"For years, the same hedge funds, private equity firms, and&nbsp;wealthy investors dismayed by the GameStop trades have treated the stock market like their own personal casino&nbsp;while everyone else pays the price," she said in a statement.&nbsp;

"It's long past time for the SEC and other financial regulators to wake up and do their jobs."

An epic battle is unfolding on Wall Street, with a cast of characters clashing over the fate of GameStop skyrocketing for a fourth straight day, thanks in part to Elon Musk.

An epic battle is unfolding on Wall Street, with a cast of characters clashing over the fate of GameStop skyrocketing for a fourth straight day, thanks in part to Elon Musk. Tesla founder Elon Musk, who has waged his own battle with short sellers before seeing spectacular gains for the electric carmaker, appeared to encourage the movement by tweeting a link to the Reddit forum along with the cryptic comment "Gamestonk!!" "Stonks" is a tongue-in-cheek term for stocks widely used on social media. Gamestonk!! https://t.co/RZtkDzAewJ — Elon Musk (@elonmusk) January 26, 2021 × Herds of amateur investors on Reddit have long been supporters of Tesla and other hyper-volatile stocks, and their influence appears to be growing. 'Short squeeze' The WallStreetBets followers have been on a GameStop buying spree, which not only pushes up the shares but puts pressure on short sellers to make purchases to "cover" their bets to avoid steeper losses. This is known on Wall Street as a "short squeeze" and can result in a dizzying rally by forcing short-sellers into becoming buyers. As a result, GameStop surged 18 per cent on Monday, another 115 per cent Tuesday and had leapt 135 per cent Wednesday. That followed a stunning 50 per cent jump on Friday. Short sellers, while reviled by some market players, are nonetheless seen as playing an important role in the markets by providing liquidity and driving down overpriced shares. But at least one GameStop short-seller said he walked away from the stock after what he claimed was harassment and threats by an "angry mob." As well as GameStop, BlackBerry, also favoured on Wallstreetbets, advanced 4.9 per cent and is up 185 per cent this year. An earlier tweet by Musk sent Etsy up almost 9% before it reversed its gains. The surge in recent days - GameStop has increased more than seven-fold to $147.98 from $19 since January 12 - has spurred concerns over bubbles in stocks that hedge funds and other speculative players had bet would fall in value. Trading in GameStop stock was halted for volatility nine times on Monday and five times on Tuesday. Why have GameStop shares been so volatile? GameStop, a well-known retail chain whose business model of selling games on discs appears to have been overtaken by a move to the internet, has been the target of "short-sellers," often big hedge funds that bet on a decline by selling borrowed shares in the hope of repaying at a lower price. But a group of amateur investors, organizing via the online platform Reddit, has fought the trend. A group calling itself WallStreetBets, with some three million members who exchange tips and boast about beating "the system," is credited with pushing up GameStop shares and roiling the Wall Street establishment. Some analysts have described the situation as a "nerds vs Wall Street" battle. Jaime Rogozinski, the founder of WallStreetBets, said the movement "is able to do what Occupy Wall Street was never able to do but on a completely different angle." "Occupy Wall Street was fed up with this saying 'It's a game we can't play, you're forgetting the little guy.' Now the little guy figured out a different way around it," he said. The WallStreetBets forum had restricted access to those outside its 3.6 million subscribers for a few hours Wednesday evening but was again visible to the public by 0115 GMT early Thursday. Should regulators intervene? The extreme volatility has raised concerns about manipulation, which could lead to an investigation by stock market regulators, and has even drawn attention from the White House. "Our economic team including (Treasury) Secretary (Janet) Yellen and others are monitoring the situation," said White House spokeswoman Jen Psaki. "It's a good reminder, though, that the stock market isn't the only measure of the health of our economy." Late Wednesday, the Securities and Exchange Commission said it was monitoring the activity. "We are aware of and actively monitoring the ongoing market volatility in the options and equities markets and... we are working with our fellow regulators to assess the situation and review the activities of regulated entities, financial intermediaries, and other market participants," an SEC statement said. Jacob Frenkel, a former enforcement lawyer with the SEC, said the situation warrants regulatory review. One option would be "a trading pause for 10 days to ensure that all investors would have access to accurate and timely information," Frenkel said. Senator Elizabeth Warren also called for scrutiny. "For years, the same hedge funds, private equity firms, and wealthy investors dismayed by the GameStop trades have treated the stock market like their own personal casino while everyone else pays the price," she said in a statement. "It's long past time for the SEC and other financial regulators to wake up and do their jobs."

GameStop prompts surge in hyper-rally after Elon Musk's tweet

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