Robinhood, others limit trading, sparking lawsuits and Senate panel hearing
NAPERVILLE, Ill. - Fed up investors protested outside the headquarters of the stock trading platform Robinhood Thursday.
It all had to do with the company stopping investors' ability to buy certain stocks that had seen unprecedented gains over the last week.
The app is now issuing an apology after it was named in a Chicago lawsuit.
The lawsuit claims a Naperville man lost big bucks after the app interfered with the trading of popular stock.
This all started when a small group of casual investors profited big while hedge funds lost billions.
Now, Wall Street is striking back.
"Really it's a great story - it's an American story... the little guy beats the big guy... it’s going to be a great movie," said financial analyst Phil Flynn.
An 18-year-old from Libertyville, Tyler Bever, used the trading app Robinhood to get in on Gamestop's stock run earlier this week.
"I feel like these small investments in GameStop and Blackberry and Nokia were mainly a win for the small investors. The small people like me," said Bever.
He made $100 off the gamble.
"I thought I was going to lose money, and I went to bed that night and I woke up with a 150 percent profit on my original stock."
But now Robinhood and other trading platforms are limiting the transactions to seemingly protect the big guys from losing even more.
"It has happened before and it's legal," said Flynn. "I do think there might be some stricter rules in the future on shorting stocks."
At least two lawsuits have been filed.
Now, Washington is getting involved.
"The administration is taking a look, the SEC is taking a look at what that is. But we all will be reviewing it," said House Speaker Nancy Pelosi.
Robinhood said it will allow the trading of the throttled stocks for a short time Friday.
The company also issued an apology saying in part:
"This was a risk-management decision, and was not made on the direction of the market makers we route to."