Jan 29, 2021 - Economy

SEC says it will "closely review" restrictions on Reddit-fueled stocks

Robinhood and GameStop logos

Photo: Olivier Douliery/AFP via Getty Images

The Securities and Exchange Commission on Friday warned Robinhood and other brokerages that it will "closely review" actions they took on Thursday that prevented investors from buying stock in GameStop and other popular Reddit-fueled stocks.

Why it matters: The move from Robinhood generated anger across the political spectrum and among small investors who wanted to participate in one of the most exciting stock-market trades of the moment.

Background: Robinhood says that it was forced by a lack of funds to scale back trading in a handful of hot names.

  • The SEC says that it's worried about the "extreme volatility" seen in those names, saying that it "has the potential undermine market confidence."
  • "[W]e will act to protect retail investors when the facts demonstrate abusive or manipulative trading activity that is prohibited by the federal securities laws," the agency added. "Market participants should be careful to avoid such activity."

Go deeper: Making sense of the GameStop circus

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