Members of US Congress Join Redditors in Fight Against Robinhood
The markets have been set ablaze in recent weeks with the story of GameStop’s stock rise. In the financial world, at least, 2021 has started off with as much of a change as it did with 2020. Not even a month is over, and there is an almost palpable sense of a financial revolution.
The Redditors of WallStreetBets would have never guessed that their movement would become a worldwide phenomenon. But that is precisely what it has become, with retail investors, regulators, and business people all offering an opinion.
It has escalated such that prominent names from all backgrounds and political stances have unified against Robinhood and Wall Street. The list of critics is something to behold — especially given that these individuals don’t often agree on other subjects.
Wall Street’s Worries Continue as Congressmen Join Redditors
The fact that a small internet community can band together to shed light on unethical Wall Street practices is incredible. Even more staggering is how they have raised support from a diverse set of individuals: This includes Alexandria Ocasio-Cortez, Donald Trump Jr., Ted Cruz, Maxine Waters, Mark Cuban, and so many more.
One of the reasons why there is such widespread support is because the presence of double standards is so clear. Technically, these Redditors are just playing by free-market rules — and for all their bluster, they’re a market-savvy bunch. They’re playing by the very rules that Wall Street has been leveraging for years.
Alexandria Ocasio-Cortez, who is a member of the Financial Services Committee, said that freezing purchases must be stopped. Texas Senator Ted Cruz, in a rare case of agreement, said that he fully agreed with Cortez’s statements. Entrepreneur Mark Cuban, meanwhile, rejoices that the “little guy” is getting an edge on Wall Street.
House Financial Services Committee Chair Maxine Waters said the same, stating that officials would have to detail with hedge funds with “unethical conduct.” The ranking Republican on the committee, Patrick McHenry, has called for a hearing as well. Since when have Democrats and Republicans been so strongly united on something, especially in the past four years?
The US Congress is set to hear the case of Robinhood. Congressional Democrats will hold at least two hearings on the matter. The prognosis is not good for those involved — except for the retail investors. If those overseeing the hearing have the same sentiment as those mentioned above, a great change is about to arrive.
Arizona representative Paul Gosar sent a letter to the DOJ, saying that the trading suspension was done to “silence individual investors.” Gosar says that rules can’t change because “Wall Street is losing.” He cites conflict of interest and monopolistic activity as the drivers behind his support for retail traders.
Retail investors have injected energy into the Occupy Wall Street ideal, with some calling it Occupy Wall Street 2.0. What’s more, in what is terrible news for hedge funds, it looks like these investors will be taking this fight to other stocks too.
Meanwhile, Robinhood’s Worries Looks Like They’re Just Starting
Arguably, Robinhood has come out the worst in all of this. The company, once intent on democratizing trade for all, is being universally pilloried. The firm’s decision to prevent further trades for retail investors only smacks of double standards.
Robinhood has effectively made the matter worse for itself. Some have argued that market maker Citadel was responsible for stopping those trades. It has firmly denied this, though that hasn’t stopped the barrage of criticism.
While regulators are looking at the bigger picture, retail traders are making sure that Robinhood also faces justice. There has been a massive internet campaign boycotting Robinhood and of review-bombing.
Robinhood is certainly caught between a rock and a hard place, but it is of its own doing. These investors will not rest until it resumes trading for those stocks — at the very least.
We are set for an exciting 2021 for several reasons. Change is coming to Wall Street, while the crypto world sets itself up for global adoption. All of this will both spur a revolution in both the equity and crypto markets.
This month’s events will forever change Wall Street. They will be ultra-cautious when it comes to their trades, and it will buoy retail traders like never before. We are in the midst of a financial revolution, in more ways than one.
What do you think will happen in the next few weeks? Will the face of investing change permanently? Let us know what you think in the comments below.