Retail brokerage firms Robinhood and Interactive Brokers have restricted trading on several stocks that have soared in recent weeks following a campaign organized on the subreddit WallStreetBets to push back against hedge funds that were short-selling the stocks.
The stocks include GameStop, AMC, Nokia, Bed, Bath and Beyond, American Airlines, and Blackberry. While new purchases will not be allowed, people who own the stock will still be able to sell their shares.
"We continuously monitor the markets and make changes where necessary. In light of recent volatility, we are restricting transactions for certain securities to position closing only, including $AAL, $AMC, $BB, $BBBY, $CTRM, $EXPR, $GME, $KOSS, $NAKD, $NOK, $SNDL, $TR and $TRVG. We also raised margin requirements for certain securities," Robinhood said in a statement.
The news caused GameStop's stock price to drop as it fell below $290 shortly after the opening bell. Gamestop was trading above $500 during premarket trading.
A Twitter account for the WallStreetBets subreddit blasted the retail brokers for restricting the trades and accused them of helping the hedge funds that have lost billions of dollars in recent weeks.
"Individual investors are being stripped of their ability to trade on @RobinhoodApp Meanwhile hedge funds and institutional investors can continue to trade as normal. What do you call a market that removes retail investors ability to buy to save institutional investors shorts?," they wrote.
The entire saga began a few weeks ago when GameStop's stock price, which was trading between $4 and $20 for the past year, suddenly spiked after a coordinated effort by retail investors to stick it to hedge funds that were betting on the stock to fall. GameStop's stock price has jumped by 1,750% this year, leaving those hedge funds on the hook for billions of dollars.
After having success boosting GameStop's stock price, the retail investors turned their eyes to other heavily-shorted stocks, including AMC and Bed, Bath and Beyond.
The moves have caught the attention of politicians and regulators who are concerned about how these actions could impact the market.
"We are aware of and actively monitoring the on-going market volatility in the options and equities markets, and consistent with our mission to protect investors and maintain fair, orderly and efficient markets," the Securities and Exchanges Commission said. "We are working with our fellow regulators to assess the situation and review the activities of regulated entities, financial intermediaries and other market participants."
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