Home TechnologyTech News Robinhood denies claims that it sold GameStop shares out from under its traders

Robinhood denies claims that it sold GameStop shares out from under its traders

Robinhood denies claims that it sold GameStop shares out from under its traders

No, Robinhood tells The Verge, it didn’t sell off full shares of GameStop, AMC, and other buzzy stocks without permission from its traders.

That contradicts the stories of twelve people who spoke with The Verge, saying that the app unexpectedly sold off their holdings in some of these companies. A number of Robinhood users expressed their surprise on social media today that the app was selling off their stakes, and we tracked down a dozen of them. These traders didn’t believe they had prompted the sales, and they said they weren’t aware of anything on their account that would have automatically triggered them.

“I didn’t have any triggers to sell the stock whether it went up or down. I certainly wouldn’t have put it at $197 when it had just been almost $500,” Jett Flores, who said he was holding stock in GameStop and AMC through Robinhood, told The Verge.

A spokesperson for Robinhood said these small sellers are wrong about how their shares were sold. “I can confirm that claims that Robinhood proactively sold customers’ shares outside of our standard margin-related sellouts or options assignment procedures are false,” the spokesperson told The Verge.

On Wednesday, Robinhood warned some investors with options in GameStop and AMC that it may automatically sell off their stakes to reduce risk, the spokesperson said. But these investors told The Verge they didn’t have options in GameStop or AMC and hadn’t purchased the stocks on margin. They had purchased the shares outright, they said, and were planning to hold onto them.

Margin orders occur when an investor borrows money from the broker (in this case Robinhood) to complete a sale, and brokers can call in those shares if they’re worried the investor can’t pay up. According to Robinhood, most of its actions have been calling in options to purchase shares — a more aggressive move, but not unprecedented. But if users fully owned their shares, as these traders claim they did, selling the holdings would be far more unusual.

The Verge saw screenshots from six traders indicating that their purchase of GameStop or AMC stock had been filled within Robinhood. Six traders sent screenshots showing that their stock in these companies had been sold, with four clearly indicating that they had been sold today. Another trader sent screenshots showing a purchase of Naked Brand stock being filled and then sold within the app. The screenshots don’t indicate how the purchases were funded or how the sales were initiated, but in several of them the app displays a message saying, “We’ve received your order to sell [#] shares of [stock] at the best available price.”

Traders who spoke with The Verge said they were disappointed to lose their stake in these companies. The traders had been planning to keep the stock for longer, and several said they certainly wouldn’t have sold it at the point that they believe Robinhood pushed through the transaction, as GameStop’s stock was faltering from a nearly $500 high.

“It’s extremely dishonest trade on their part and unacceptable,” Ian Q., who said Robinhood unexpectedly sold his shares in GameStop this morning, told The Verge.

The surprise selloff isn’t happening to everyone — plenty of people on the r/WallStreetBets subreddit (and one person I know, who told me they purchased GameStop stock days ago) say they weren’t impacted. And though traders may be outraged by the surprise, Robinhood’s terms of service grant it permission to close a trader’s position under a number of circumstances.

While r/WallStreetBets has been at the center of the frenzy around GameStop and AMC stocks, Robinhood has been the tool of choice for many of the small-time and brand new traders jumping in to take part. But this morning, Robinhood blocked new purchases of stock from GameStop, AMC, BlackBerry, Nokia, and others that were spiking in large part because of purchases coming through the app. The company is now facing widespread backlash from users, celebrities, and politicians, and it’s announced plans to re-open purchases on a “limited” basis on Friday.

It’s still not clear what happened to cause these users’ stakes to be sold off today. But at the very least, it means Robinhood has even more unhappy customers.

This article is auto-generated by Algorithm Source: www.theverge.com

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