Is Robinhood Blocking Game Legal
«The SEC has been very concerned that many young investors, many of whom are too young to legally drink alcohol, will instead be intoxicated by digital exposure to the market,» said Howard Fischer, a partner at law firm Moses & Singer, adding that the industry is likely to retaliate harshly. The underlying idea is to get profits quickly to get an immediate return on their investment. While this practice is neither illegal nor unethical, this approach carries an inherent risk. Popular investment app Robinhood became the center of controversy after deciding to freeze trades for GameStop on Jan. 28. Shares of the video game retailer soared after traders on Reddit began desperately buying the company`s shares. GameStop shares have since collapsed, only to rise higher. Did Robinhood trade illegally in the GameStop Short Squeeze? This does not appear to be the case. Once the transfer is complete and you now have X shares in your trading account, proceed to sell them at their current market price.
Therefore, it is a waiting game. If you`re one of those «old» gamers who grew up with long lines outside GameStop stores for their console launches, then the move of these Wall Street short sellers probably struck a chord. Altonaga rejected several of the allegations against Robinhood, noting that the case «raises some interesting legal issues that are confused by the novelty of the Robinhood platform,» according to Bloomberg. The rally rallied rammed GameStop`s shares more than 1,500% higher at one point, causing a «short tightening» that burned hedge funds that had bet against the video game retailer`s shares. Shares of the AMC Entertainment movie chain (AMC. N) and other companies also advanced. The SEC noted that many brokers, as well as robo-advisors, are increasingly using AI-based analytics, video game-like features, and other behavioral incentives to promote stock trading or sell certain products. A survey by the Financial Industry Regulatory Authority (FINRA), which also intensified the review of gambling-type trading features, found that among investors who opened an investment account in 2020, 66% made new investments. The real question is: Did Robinhood trade illegally at the GameStop Short Squeeze? Besides, is it illegal for Robinhood to restrict trade? Before we can answer these questions, let`s start at the beginning. «A central question is whether user interface design can be considered investment advice and to what extent interface design influences investment decisions.
This is a very difficult empirical and legal question facing the SEC,» Hu said. You can still sell the shares, most of which are still among the most used on the platform, according to the Robinhood app`s frequently updated «Most Popular» list, but if not? No dice. And while experts say Robinhood was within its legal and regulatory rights to shut down the Stonsk party, its users are in turmoil. «Yes. You integrate this experience into trading as if it were a game, but with real money in-game, it`s a big deal. «This could potentially be a game changer,» Fischer said. In addition, it would have been unlawful for the Company to continue trading in GameStop stock before meeting the capital requirements established by the NSCC. After the hearing and a lawsuit filed by the family of an app user who committed suicide, Robinhood said it would invest in its customer service. The lawsuit against the investment platform focuses on how Alex Kearns, a 20-year-old client, received no response from the company after the app showed he suffered $730,000 in losses. Robinhood`s customer service eventually responded to the issue, confirming that they didn`t owe the money, but it was too late. There is also an arbitration clause that restricts the means by which aggrieved customers can seek redress. Oscar Gonzalez is originally from Texas and covers video games, conspiracy theories, disinformation, and cryptocurrency.
«Americans are bombarded every day with behavioral calls. Brokerage apps and robo-advisors do the same,» SEC Chairman Gary Gensler told CNBC last week. «Their motivation is to make more sales.» This week, a similar scenario unfolded with shares for movie theater chain AMC, electronics companies BlackBerry and Nokia, and more, albeit on a smaller scale. Robinhood prohibited the purchase of a total of 13 shares; Platforms such as TD Ameritrade, Interactive Brokers and Webull have also restricted high-volatility stocks to varying degrees. The National Securities Clearing Corporation (NSCC), whose mission is to provide central custody, clearing and settlement services for the capital markets, imposes a capital requirement on brokerage firms. Webull is another investment app that tweeted on Jan. 28 that it had begun restricting trading in shares of GameStop, AMC, and Koss. Webull cited the «extreme volatility» of stocks by limiting user trades to closing positions. It then lifted these restrictions on the same day. Anthony Denier, CEO of Webull, said the company`s clearing firm was also told it needed to significantly increase its capital requirements to accommodate all trades, which had led to a temporary halt in trading in these volatile stocks.