Robinhood, Under the Gun, Raises $2.4 Billion – The New York Times

By limiting trading, it was able to bring down the cushion of cash, or margin, it was required to keep by its clearinghouse. The company eased some of those curbs on Friday and on Monday decreased the number of companies with trading restrictions to eight from 50.

The limits on trading by Robinhood set off a furious outcry among small investors, who claimed that the very app that had democratized trading was now doing the bidding of Wall Street.

And the news that Robinhood had raised $2.4 billion so that it could ease curbs on trading didn’t impress William Moyer of North Carolina. “It’s just them trying to cover their butts,” he said. “They realized last week they screwed up big time, and now they’re trying to make amends by saying they have the money there to be able to do all those trades now.”

Mr. Moyer, a 26-year-old automotive service adviser who had purchased shares of GameStop, Nokia, AMC and BlackBerry in the past two weeks, said he was offended by Robinhood’s decision to restrict trading on the platform. “I had to suffer through 2008 with my family,” he said, referring to the 2008 financial crisis. “I feel like this is just another way of the big banks showing that they control everything we do,” he said. “They’re just trying to keep us from actually growing our wealth as individuals.”

Robinhood’s decision to restrict trades for stocks also drew the attention of lawmakers from all ends of the political spectrum. Representative Alexandria Ocasio-Cortez, Democrat of New York, called it “unacceptable.” Senator Ted Cruz, Republican of Texas, retweeted her in agreement.

Lawmakers expect to hold hearings to look into Robinhood’s role in January’s market fluctuations.

“I do want to make sure that we understand what happened there,” Senator Pat Toomey of Pennsylvania, the incoming top Republican on the Senate Banking Committee, said during a Monday morning appearance on CNBC of the decision to restrict trades.

Representative Maxine Waters, the California Democrat who is chairwoman of the House Financial Services Committee, said last week that she would hold a hearing on short-selling as well as “online trading platforms” and “gamification.” On Monday, the committee announced it would hold a hearing on the GameStop issue on Feb. 18.