In the House, Rep. Maxine Waters, who chairs the House Financial Services Committee, said she also intended to hold a hearing. “As a first step in reining in these abusive practices, I will convene a hearing to examine the recent activity around GameStop (GME) stock and other impacted stocks with a focus on short selling, online trading platforms, gamification and their systemic impact on our capital markets and retail investors,” she said in a statement.
News of the hearings comes after Robinhood was hit with a class action lawsuit after it restricted users from trading on Thursday. The company said in an update it would resume “limited buys of these securities” beginning Friday.
Separately, Fox Business reported that Robinhood was anticipating an SEC investigation that “involves market manipulation.” “The SEC somehow goes and looks at the Reddit boards and tries to figure out who’s hyping what, who’s touting what, and maybe sort of link it with trades,” Fox Business’ Charlie Gasparino said, citing “regulatory sources.” He added that such an investigation is likely an “impossible” task since most Reddit users are anonymous.
A Robinhood spokesperson didn’t immediately respond to a request for comment on potential investigations. And while the SEC hasn’t officially weighed in on Robinhood, Reddit, or GameStop, it issued a statement earlier this week saying it was “actively monitoring the on-going market volatility in the options and equities markets.”
Correction: A previous version of this story referred to an incorrect statistic that more than half of Robinhood’s users own GameStop stock. We regret the error.