Vladimir Tenev, co-founder and CEO of stock trading app Robinhood, defended his company’s decision to block purchases of GameStop and other surging stocks as a move to “protect investors” on Thursday.
Tenev made the remarks amid widespread criticism that the company’s action was taken to protect wealthy investors and hedge funds at the expense of the retail investors that the app purports to serve. GameStop and a handful of other stocks saw values massively increase after a group of Reddit users recently banded together to drive up prices in opposition to hedge funds that had bet prices would soon fall by taking “short” positions.
“As a brokerage firm, Robinhood has many financial requirements, including SEC net capital obligations and clearinghouse deposits,” Tenev said in a statement posted to Twitter. “Some of these requirements fluctuate based on volatility in the markets and can be substantial in the current environment.”
“These requirements exist to protect investors and the markets and we take our responsibilities to comply with them seriously, including through the measures we have taken today,” he added. “To be clear, this decision was not made on the direction of any market maker we route to or other market participants.”
Tenev added that “limited buys” of the affected stocks would be allowed to resume on Friday, while bemoaning “the lightning-fast spread of information and misinformation that takes place on social media.”
Newsweek reached out to Robinhood for additional information and comment.
This is a developing story and will be updated as more information becomes available.
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