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The enthusiasm for extreme price swings at GameStop and other companies in the US financial market has now also reached the political level.
The future chairman of the US Senate banking committee, Sherrod Brown, announced a hearing “on the current state of the stock market.” “People on Wall Street only care about the rules when it hurts,” Brown’s statement said.
Small blocked investors
The background to this is anger among small investors over restrictions on trading GameStop papers. You find yourself slowed down on the road to victory. In particular, the online broker Robinhood, widely used by organized small investors, was suspected of favoring large Wall Street investors. Robinhood had so restricted the trade in newspapers that they could only be sold but could no longer be bought. That could spark a broader debate on regulation.
According to the US media, the chair of the Finance Committee of the US House of Representatives, Maxine Waters, is planning a hearing. It should be about the recent turmoil in the financial market and the role of hedge funds in it. Other high-ranking Democratic Party politicians like Elizabeth Warren and Alexandria Ocasio-Cortez also asked for clarification. Republican Party officials also did not understand Robinhood’s decision.
After the storm of outrage and initial complaints from small investors being pushed out of price gains, Robinhood again eased trading restrictions on securities. GameStop shares later rose more than 70 percent in after-hours trading. The roles of other companies, such as the smartphone pioneer Blackberry, for which restrictions also applied, also grew strongly.
No pressure from Wall Street?
Robinhood boss Vlad Tenev denied in an interview with Bloomberg TV that his company has been pressured by major investors on Wall Street. Robinhood itself did not have enough free capital to secure purchases of the shares traded with the necessary deposits. According to the “New York Times”, Robinhood had to raise more than a billion dollars from its short-term investors to maintain its liquidity. The buy stop was a technical and operational decision, ”said Tenev.
