In a press release on January 29th, Rep. Nancy Mace (R-SC-01) called on House Oversight Committee Chairwoman Carolyn Maloney (NY-12) to investigate Robinhood’s decision to prohibit users from purchasing securities in Gamestop following a Reddit-fueled price surge.
Wall Street hedge funds and other investment firms recorded losses of up to $11 billion after members of the Wall Street Bets (WTS) forum on Reddit organized readers to purchase heavily shorted securities like Gamestop, AMC, and Blackberry. Most of the individual investors involved in the short squeeze used the app developed by Robinhood, a financial services company that allows individual users to invest any amount of money into the stock market with no fees attached to them, in their words, “to democratize finance.”
At the end of the trading day on January 27th, Gamestop’s stock price had risen nearly 135%, and short-sellers lost billions. The next day, Robinhood and several other financial services companies, decided to restrict users from purchasing the most volatile securities (including GameStop). The decision drew an outcry from the public and, most notably, from members of both parties in Congress.
While Congresswoman Rashida Tlaib (D-MI-13) called for the House Financial Services Committee to investigate Robinhood’s actions, Rep. Nancy Mace has specifically called upon the House Oversight and Reform Committee to ensure that Robinhood is held accountable for its actions. In her press release, she states, “Individual investors should have access to the same tools and resources the big firms have, and should follow the same rules. Any interference in the free markets, either from big government or big business, is wrong.”
In a later interview with Yahoo Finance, Rep. Nancy Mace further clarifies her position on Robinhood, “One of the things I learned after the debacle last week with GameStop and Reddit is that there were capital issues of Robinhood. I want to know– learn more about that process and what actually happened and what didn’t so we can address the issue in the future.”
In any case, financial services and tech firms are likely to be scrutinized by both parties under the Biden Administration’s heavy-handed regulatory agenda. Robinhood CEO Vlad Tenev is scheduled to testify before the House Financial Services Committee this month.