We previously reported that the there have been multiple lawsuits filed against Robinhood over the stoping of free trading on GameStop and other stocks investors were targeting to buy to stop shorts.
But now there may be more action against Robinhood and the hedge funds in the effort to stop investors.
Texas Attorney General Ken Paxton said he would be looking into the matter, including into Discord, which banned the WallStreetBets server after WallStreetBets encouraged the buys of GameStop and other stocks.
Today I’m launching an investigation into @RobinhoodApp, @discord, and hedge funds who rigged our free mkt for the benefit of Wall St elites.
The US econ should be transparent, open. This week’s coordinated corruption by a cabal of oligarchs shows it isn’t. I’ll help fix that.
— Attorney General Ken Paxton (@KenPaxtonTX) January 29, 2021
Reddit investors at WallStreetBets encouraged the buying to drive the stock up. But then hedge funds lost a lot and Robinhood stopped its own investors from trading to ‘stabilize the market’ i.e. stop the hedge funds from losing money, thus preventing their own investors from gaining.
Discord claimed Wednesday it had banned the group due to “hateful and discriminatory content,” but WallStreetBets moderators said that was “unethical.”
“You know as well as I do that if you gather 250k people in one spot someone is going to say something that makes you look bad. That room was golden and the people that run it are awesome,” one of the moderators wrote. “Discord did us dirty and I am not impressed with them destroying our community instead of stepping in with the wrench we may have needed to fix things, especially after we got over 1,000 server boosts. That is pretty unethical.”
Discord later said it was working on moderating a new server.
Paxton accused the companies of rigging the system against the smaller retail investors.
“The US econ should be transparent, open,” he said. “This week’s coordinated corruption by a cabal of oligarchs shows it isn’t. I’ll help fix that.”
Today I issued CIDs to @RobinhoodApp, @discord, @Citadel, and others that suspended stock trading and investing. This apparent coordination to shut down threats to their market dominance is shockingly unprecedented and wrong.
Read copies of the CIDs ⬇️https://t.co/mp2ZahCkQJ
— Texas Attorney General (@TXAG) January 29, 2021
Paxton has now issued 13 civil investigative demands (CIDs) to Discord, Robinhood Financial, Robinhood Markets, Robinhood Securities, Interactive Brokers, TD Ameritrade, TD Bank, E-Trade, WeBull Financial, Public Holdings, M1 Holdings, Citadel Financial and Apex Clearing Corporation.
“Wall Street corporations cannot limit public access to the free market, nor should they censor discussion surrounding it, particularly for their own benefit. This apparent coordination between hedge funds, trading platforms, and web servers to shut down threats to their market dominance is shockingly unprecedented and wrong. It stinks of corruption,” Paxton said. “I’m hopeful that these companies will step up and cooperate with these CIDs in order to clear any confusion over why stock purchases were forcibly closed and why even conversation around these stocks was silenced.”
Lawmakers on both sides of the aisle have also called for investigations and the SEC has said they were ‘monitoring’ the situation.
Sounds like the legal situation may be heating up which may be one reason that Robinhood did allow some limited trading today in GameStop and the other stocks, to quiet the furor and the circling legal wagons.