(TheDailyHorn.com) – Last week, retail investors on Reddit teamed up to buy GameStop stock and drove the price of the fledgling company stock off the chart. The price went from approximately $40 per share to over $400. However, before the mass stock purchases, hedge fund managers were betting the stock would drop and bought short sale options. They lost a whopping $19 billion. A conspiracy theory ensued that the Robinhood CEO refuted.
“Our decision to temporarily restrict customers from buying certain securities had nothing to do with a market maker… or anyone like that putting pressure on us,” @RobinhoodApp CEO @vladtenev says. “It was entirely about market dynamics and clearinghouse deposit requirements.” pic.twitter.com/Pb2iZpu3Bh
— Yahoo Finance (@YahooFinance) January 29, 2021
Robinhood’s mission is to make stock investment accessible for everyone, not just the rich. The conspiracy started when Robinhood locked out small investors from buying the stock as the prices surged. However, big hedge funds and wealthy traders were still allowed to buy and sell the stock without restrictions. Robinhood CEO Vlad Tenev said that was a conspiracy that wasn’t true.
Tenev claims the temporary halt was only because of the volume of small transactions that squeezed companies that processed the massive volume of transactions. Federal regulations and clearinghouse rules, he claimed, caused the issue, not Robinhood.
There could be a lot of revelations in the days and months ahead about what happened and why.
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