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The stock price of video game retailer GameStop increased by over 1,000 percent in the span of a few days following a series of events, in part as a result of heavy buying from retail investors and enthusiasm for the stock expressed in a forum on Reddit. As a result, several trading platforms, including Robinhood, restricted investment in GameStop along with other stocks that saw steep stock price increases (see Robinhood official statement).
Following Robinhood's restriction of trading on GameStop, a class-action lawsuit was filed against Robinhood, describing the platform's removal of GameStop stock as a manipulation of the market and as in violation of its obligations to its customers. The SEC (see here and here), New York Attorney General and U.S. House Committee on Financial Services stated that they are closely reviewing the actions of trading platforms and market participants in light of the unusual price volatility.
Commentary
Musical choice: Stop the game, I want to get off (or something like that).
Primary Sources
- Brendan Nelson v. Robinhood Securities, LLC
- SEC Statement, Allison Herren Lee; Hester M. Peirce; Elad L. Roisman; Caroline A. Crenshaw: Statement Regarding Recent Market Volatility
- SEC Statement, Allison Herren Lee; Pete Driscoll; Christian Sabella: Joint Statement Regarding Ongoing Market Volatility
- Robinhood Statement on Market Volatility
- NYAG Statement, Letitia James: Attorney General James Reviewing Robinhood App Activity
- U.S. House Financial Services Statement, Maxine Waters: Following Recent Market Instability, Waters Announces Hearing on Short Selling, Online Trading Platforms
- NASAA Press Release: NASAA Reminds Regulated Firms of Customer Obligations and Investors About Risks of Stock Price Volatility
- GameStop Home Page
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