Sherrod Brown
Sherrod Brown.
AP Photo/J. Scott Applewhite, File

  • Democrats in Congress will hold at least two hearings on Wall Street and online trading.
  • Rep. Maxine Waters announced she will convene a hearing in the Financial Services Committee.
  • Robinhood received immense backlash for limiting purchases of GameStop and AMC stock.
  • Visit Business Insider’s homepage for more stories.

Democrats in both the House and the Senate have announced plans to hold hearings into Wall Street’s practices and the inner workings of online trading platforms amid the controversy surrounding GameStop stock.

Sen. Sherrod Brown of Ohio, the incoming chairman of the Senate Banking and Housing Committee, said Thursday that he will hold a hearing on the matter soon. 

“People on Wall Street only care about the rules when they’re getting hurt,” Brown said. “American workers have known for years that the Wall Street system is broken – they’ve been paying the price. It’s time for SEC and Congress to make the economy work for everyone, not just Wall Street.”

Read more: How hedge funds are tracking Reddit posts to protect their portfolios after the Wall Street Bets crowd helped tank Melvin Capital’s short positions

House Financial Services Committee chairwoman Rep. Maxine Waters of California also said she would hold public hearings after multiple members of the committee, including Reps. Alexandria Ocasio-Cortez of New York and Rep. Rashida Tlaib of Michigan, called on the committee to probe the matter. 

Waters said the Financial Services Committee will hold a hearing specifically "to examine the recent activity around GameStop stock and other impacted stocks with a focus on short-selling, online trading platforms gamification, and their systemic impact on our capital markets and retail investors." 

 

In January, retail investors and members of the popular Reddit forum Wall Street Bets have helped to push up shares of GameStop, AMC, Nokia, and BlackBerry in a short-squeeze rally. Major hedge funds had been heavily shorting, or betting against, those stocks, causing losses for those hedge funds and short-sellers. 

Online trading platforms Robinhood and Ameritrade received immense backlash from financial industry watchers and politicians on Thursday after they moved to temporarily bar customers from purchasing shares of companies like GameStop and AMC Entertainment.

Ocasio-Cortez called Robinhood's trading restrictions "unacceptable," with Sen. Ted Cruz of Texas saying he "fully agree[d]" with her.

At around 4:15 p.m. ET, Robinhood co-founder Vlad Tenev published a statement on Twitter.

"Starting tomorrow, we plan to allow limited buys of these securities," he wrote. "We'll continue to monitor the situation and make adjustments as needed."

He added: "To be clear, this decision was not made on the direction of any market maker we route to or other market participants." 

Read more:

A leading progressive Democrat slams Robinhood's move to restrict trading on some stocks after Reddit-fueled surge

These hedge funds have got torched by the Wall Street Bets army that targeted their short positions in GameStop

'The trade of a lifetime': Silver Lake and Mudrick have reaped huge gains from their AMC investments as Reddit traders send the stock soaring

'Anarchy never works': Webull CEO Anthony Denier told us why the SEC should intervene as an army of Reddit traders takes over the market - and said membership exploded as people jumped ship from Robinhood

Read the original article on Business Insider