The brokerage firm Robinhood has increased trading restrictions by adding 50 company stocks including Starbucks, Nokia and others to its earlier list. On Thursday there were 13 restricted stocks but the number almost quadrupled as the restricted stocks in the list rose to 50 by mid Friday.
As per the company, this move had to be taken as a result of overwhelming trading volumes through the week and into the weekend.
Users could buy a maximum of 1 share for most of the securities listed on the app and five shares of other securities listed. Adjustments would be made as and when required. The company indicated that the limits are dynamic and could ebb and flow throughout the day.
Vladamir Tenev, founder of Robinhood said that limited buys of securities would be lifted on Friday, while continuously monitoring the prevailing situation.
He said that they had “financial requirements,” “SEC net capital obligations” and “clearinghouse deposits” obligations that they needed to comply with and that led them to apply restrictive measures on trading volumes.
Earlier, retail investors went on a buying spree after browsing posts from the online forum WallStreetBets on Reddit. This led to a huge spike in shorted stock shares. Investors began buying stocks in large numbers leading to Robinhood’s restrictions on certain stocks.
GameStop, Blackberry, Bed Bath & Beyond are some of the companies who saw a huge surge in stock sales. Their trading volumes rose to great heights after a long stagnation period.
Some of Robinhood’s users have put a class-action lawsuit against the company. The suit alleges that the app had fore knowledge when it restricted certain security transactions, making its investors lose opportunities.
Politicians across the nation and a few celebrities joined together in condemning the app’s decision to restrict trading.
Letitia James, New York’s Attorney General said that her office will investigate the move.