After the Robinhood investment app made a highly controversial decision to block purchases of GameStop stocks on Thursday, it received bipartisan condemnation from congressional leaders like Alexandria Ocasio-Cortez and Ted Cruz, along with intense pushback on social media where the fight between retail investors who use the app has dramatically played out over the course of the week. That decision is now being reversed. As of Friday, Robinhood users can now make “limited buys” of stocks like GameStop, AMC and others that were targeted by Reddit day traders. The investment app also offered up an explanation for the now temporary ban, which it blamed on SEC and other vague financial regulations.
“Starting tomorrow, we plan to allow limited buys of these securities,” the company announced in a blog post on Thursday night. “We’ll continue to monitor the situation and may make adjustments as needed. To be clear, this was a risk-management decision, and was not made on the direction of the market makers we route to.”
However, that explanation isn’t holding water. Robinhood CEO Vlad Tenev appeared on Cuomo Prime Time on Thursday evening, where he was clearly not expecting host Chris Cuomo to pushback on the GameStock ban. Cuomo grilled Tenev on the decision and the “lack of trust” that’s now fomented from what looks like a move to put the interest of big Wall Street players over that of the day traders who use the app. Cuomo also challenged Tenev’s assertion that it was the SEC who forced Robinhood to pull the controversial stocks, and the CNN host listed a variety of conditions that were not present for that to be the case. Tenev was visibly caught off guard by Cuomo’s Wall Street experience.
Also on Thursday evening, Tenev appeared on CNBC to insist that his company isn’t having any liquidity issues that would have prompted the GameStop trade ban.
Robinhood CEO Vlad Tenev speaks out after the company decided to restrict trading in GameStop and other stocks today. “In order to protect the firm and protect our customers we had to limit buying in these stocks,” he tells @andrewrsorkin. https://t.co/LsJ5iNjJAB pic.twitter.com/yJATy66TcZ
— CNBC (@CNBC) January 29, 2021