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U.S. regulators probe Robinhood over trading curbs

TechnologyFeb 26, 2021 05:25PM ET
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© Reuters. The welcome screen for the Robinhood App is displayed on a screen

By Niket Nishant and John McCrank

(Reuters) - Retail brokerage Robinhood said on Friday U.S. regulators were looking into its temporary trading curbs on so-called meme stocks earlier this year as shares of companies like GameStop Corp (NYSE:GME) soared during a social media-fueled short-squeeze.

The brokerage, whose trading app surged in popularity over the past year, also said in a regulatory filing https:// detailing the probes that it set aside $26.6 million for a potential settlement around trading outages in March 2020, as well as its options trading policies.

Menlo Park, California-based Robinhood was at the heart of a mania that gripped retail investors in late January following calls on Reddit thread WallStreetBets to trade certain stocks that were being heavily shorted by hedge funds.

The flurry of activity drove up prices of the shares until Robinhood, along with several other brokers, restricted buying of the stocks, including GameStop and AMC Entertainment (NYSE:AMC) Holdings Inc, angering many of its customers.

The company later lifted the curbs and said the move had been necessary due to a surge in clearinghouse collateral requirements.

Robinhood, which is expected to go public this year with a valuation of $20 billion, has more than 13 million users with a median age of 31, according to its most recent figures.

The company's app outages in March came as markets whipsawed in reaction to the coronavirus pandemic.

Robinhood said it was in settlement talks with the Financial Industry Regulatory Authority over the outages, as well as its options trading policies.

The company said it has received inquiries from the SEC, FINRA and the New York Attorney General's Office, among others.

Representatives for FINRA and the SEC declined to comment.

The SEC and other regulators are also examining incidents of unauthorized takeovers Robinhood customer accounts, the broker disclosed.

U.S. regulators probe Robinhood over trading curbs
 

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Comments (4)
henry park
henry park Feb 28, 2021 12:18PM ET
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if u invested for the whole reddit cause of sticking it to the hedge funds then u losing money was already expected. so all u ppl complaining just shows u tried to take advantage to make money and failed in doing so. so now u go and blame others for u losing money but no one told u to buy no one said u couldn't sell no one told u to sleep in no one told u that u need to grow up and learn that it was ur own fault for putting money in a stock that was just powered by greed
henry park
henry park Feb 28, 2021 12:14PM ET
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you guys are funny. they didn't even stop you from selling the stock so you could've gotten out wenever. nothing ever goes up without coming back down. you wanted to put ur money in a meme stock obviously the risk is high for you to lose money. you lost your own money not the brokerage stop blaming others for your failures and mistakes.
Viking Fire
Viking Fire Feb 27, 2021 6:43AM ET
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You cant trust a broker who chooses on his own accord to stop your selling and buying because they thought it would hurt their own wallet. Anyone using RH are insane. If s crash comes they will keep your money. Theyve already proven it.
Zach Lohman
Zach Lohman Feb 26, 2021 6:13PM ET
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Great, are the people that actually got hurt going to see the money?
 
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