Rep. Jaime Herrera Beutler, R-Battle Ground, joined a growing, bipartisan chorus of lawmakers calling for an investigation into restrictions on trading GameStop stock last week.
In an open letter to Securities and Exchange Commission Chairwoman Allison Herren Lee on Friday, Herrera Beutler called the temporary ban on buying GameStop stock among retail investors an example of unfair stock market manipulation.
“Americans deserve integrity in our financial markets, but it appears some brokerage platforms may have broken the law by putting their thumb on the scale to protect privileged Wall Street investors over small individual investors,” Herrera Beutler said. “This is not just unfair to these individual investors, it’s an attack on our nation’s free market principles.”
Last week, a few apps designed to make trading on the stock market easier for the average person — including Robinhood, which has 13 million downloads — temporarily blocked its users from buying certain stocks, such as GameStop, citing “market volatility.”
GameStop stock had been heavily shorted by multiple hedge funds. Some lost billions when the cost of the stock skyrocketed due to a Reddit forum for retail traders. Robinhood’s decision to freeze that stock — along with a few others targeted by the Reddit forum, such as the movie theater chain AMC — sparked widespread outrage among the app’s users and lawmakers on both sides of the aisle.
“Is it appropriate for financial services institutions to restrict the purchase but not the sale of a particular stock in response to market changes spurred by honest and freely available information?” Herrera Beutler asked in her letter to the Securities and Exchange Commission chairwoman. “More specifically, does a broker preventing a retail investor from purchasing a stock such as GME constitute market manipulation given possible conflicts of interest, and should these sorts of actions be permitted?”