Brokerage Firms Freeze GameStop Stock Purchases

Multiple reports have come in that major stock trading apps have completely restricted the buy orders of GameStop (NYSE: GME) and other recent high volume trades. These brokerage firms include Robinhood, TD Ameritrade, E-Trade, and SoFi. Trades were still able to sell GameStop shares to users of other apps and also major Wall Street intuitions. Many people online viewed this restriction as deliberate market manipulation, including high profile business people and politicians such as Elon Musk and Alexandria Ocasio Cortez. Traders have begun to file complaints with the United States Securities and Exchange Commission. The firms responded by saying normal buy orders will be restored on friday.

 

This entire incident started with GameStop’s potential collapse into bankruptcy, following troubling reports during the COVID-19 pandemic. Large hedge funds attempted to rake in billions by short selling GameStop (sell now, buy in later and pocket the difference), but got greedy and put nearly 140% of total stocks on the line. Retail investors on Reddit and other firms got wind of this risk and responded by bolstering the stock price nearly 1600%. One fund, Melvin Capital, was in a particularly vulnerable position of going under. It would appear that both Melvin and Robinhood are backed by the same venture, Citadel hedge fund, and the freeze may be a means to bailout their partner.      

Kurtis Seid, NoobFeed
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