Robinhood reportedly sells GameStop shares without permission from traders
Trading app Robinhood on Thursday prevented investors from buying several stocks in order to facilitate short-selling hedge funds in their battle against the working class investors from the WallStreetBets subreddit. The app also raised margin requirements for the same stocks, under the pretext of helping investors "navigate this uncertainty." Twelve users of the platform informed The Verge Robinhood sold trending stocks like GameStop without permission.
GameStop saw a 17-fold stock price rise this week due to enormous retail trader interest, fueled by a discussion on the WallStreetBets subreddit. Robinhood had halted trading on trending stocks such as AMC, GameStop, BlackBerry, Bed Bath & Beyond, Nokia, and Koss. Customers who owned these stocks were only given the option to close their positions; that is, selling their existing stocks.
Robinhood has since "reopened" buying for GameStop in "limited quantities." Investors reported that the company had sold the shares they were holding without prior consent. The app users clarified they had not placed automated triggers set to sell the shares. Robinhood could have sold users' stocks if they were purchased on margin, but investors confirmed they had purchased the shares outright.
Meanwhile, hundreds of thousands of investors were unhappy with the "assistance" provided and left negative reviews for Robinhood on the Google Play Store. The Play Store algorithm adds weightage to recent reviews while calculating app ratings. This caused Robinhood's rating to plummet from 4.2 to just one star. But then, Google deleted over 100,000 negative reviews for Robinhood and restored its rating to 4.2.
While Robinhood's actions have already invited a class action lawsuit, a Change.org petition requesting Apple to delist the app from the App Store has accrued over 30,000 signatures. The petition says Robinhood's attempts to manipulate the market are in clear violation of Apple's guidelines for apps in its ecosystem. Meanwhile, Robinhood users on iOS tweeted Apple is censoring their user reviews as well.
Allen Tran, the creator of the Robinhood Stock Traders group on Facebook, was on Wednesday informed that his group was being disabled. Facebook said the 157,000-member group violated its policies on "adult sexual exploitation." Tran says the group was disabled because Facebook is not a free platform like Reddit. He describes the move as backlash for the group for buoying GameStop stock price.
Allen Tran told Reuters he had never seen adult content on the Facebook group. Facebook spokeswoman Kristen Morea said the group was removed for violating Community Standards, "unrelated to the ongoing stock frenzy." She refused to elaborate further. Tran revealed the group was earlier suspended on January 7 after being labeled a "dangerous organization." The action was later reversed after he appealed to Facebook.