Short sellers on Wall Street have lost billions in recent days after betting against the future of several struggling firms that got unexpected wind in their sails from a group of online amateur stock traders. However, after brokerage firms cried foul and moved against the small-time traders, lawmakers cried manipulation and pledged to investigate.
Amid increasing scrutiny for its business practices, online stock trading app Robinhood is looking for someone to defend its interests in Washington, posting an ad for a Federal Affairs Manager on Friday morning.
“This role will focus on federal advocacy and government affairs related to legislative and regulatory matters, and will report to our Deputy General Counsel of Litigation, Regulatory Enforcement & Investigations, and Government & Regulatory Affairs,” the listing notes, adding that the person will have to “drive advocacy and engagement with Congress, regulatory agencies, and other stakeholders.”
“We continuously monitor the markets and make changes where necessary. In light of recent volatility, we are restricting transactions for certain securities to position closing only … We also raised margin requirements for certain securities,” the company wrote in a Thursday blog post.
Robinhood was closely followed by other competitors, including Interactive Brokers, and Webull, prompting outcry by federal lawmakers who demanded a congressional inquiry on the matter. It also drew a class-action lawsuit after users accused the firm of violating its contract. While not included in the suit, other users claimed Robinhood was also closing their positions on some stocks, selling them off at rock-bottom prices without being asked to by the owner.
In a Twitter thread on Thursday afternoon Robinhood co-founder Vladimir Tenev said the company would begin allowing “limited buys” of some of the restricted stocks on Friday, adding that “We’ll continue to monitor the situation and make adjustments as needed.”
‘Big Guys’ Lose Big, ‘Little Guys’ Blocked From Winning Big
The story of a group of small-time traders outwitting professional investors who pumped billions into short-selling the stocks of GameStop and other companies, gambling the firms would lose value, has become a sort of “David and Goliath” moment amid the economic strife of the COVID-19 pandemic. In contrast, the rushing to shut down the small-timers amid a ‘“short squeeze” that cost the professionals billions by gambling the stocks would have declined by now has been seen as proving the system is rigged against the little guy.
“They’re out for revenge against any working or middle class person who made a bet to try and increase their income just a little bit.”
“The number one rule on Wall Street is that the rich people are never allowed to lose money,” BreakThrough News journalist Kei Pritsker noted, calling attention to pundits who demanded Securities and Exchange Commission charges against the Redditors for “market manipulation.”
“When hedge fund billionaires move markets, they get huge bonuses. When ordinary Americans move market, they get shut down by Wall Street,” wrote Robert Reich, an economic commentator and former US Secretary of Labor. “The system is rigged.”