Why is the Robinhood Trading App. in Hot Water?

Following a volatile trading week in GameStop and other securities, Robinhood now faces a class action and congressional investigation after it restricted users from trading a handful of stocks including GameStop. Online small investor communities—particularly Reddit’s small investor WallStreetBets chat forum—drove an investment frenzy in GameStop and other stocks last week. Masses of regular investors used Robinhood to place their bets and day trade. The meteoric stock rise of GameStop hit a cliff when Robinhood abruptly halted and then restricted trading of this stock and others on Thursday January 28th. Investor outrage exploded over lost investment opportunities. Congress has called Robinhood’s CEO to testify at a congressional hearing amid allegations of its collusion with institutional investors that would benefit from the imposed trading restrictions, to the detriment of the small investors driving the stock up. Read full article here.
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