Texas Attorney General Ken Paxton on Friday issued 13 Civil Investigative Demands to several trading platforms, including the embattled app Robinhood, in the wake of restrictions placed on GameStop stock thanks to traders on Reddit sending its shares soaring this week.
“Wall Street corporations cannot limit public access to the free market, nor should they censor discussion surrounding it, particularly for their own benefit. This apparent coordination between hedge funds, trading platforms, and web servers to shut down threats to their market dominance is shockingly unprecedented and wrong,” Paxton wrote in a statement. “It stinks of corruption,” Paxton said in a statement. I’m hopeful that these companies will step up and cooperate with these CIDs in order to clear any confusion over why stock purchases were forcibly closed and why even conversation around these stocks was silenced.”
The CIDs, which are the civil equivalent to a subpoena, were fired off following a wild week in which members of the WallStreetBets subreddit bought GameStop shares en masse, sending the share price soaring. In addition to GameStop, the subreddit members also drove up the share prices of AMC Theaters and Bed Bath & Beyond.
The Robinhood stock trading app raised $1 billion in capital from investors overnight on Thursday, a day after it shut down transactions for GameStop stock and other shares out of concern for market volatility.
The no-fee trading app said it would reopen some trading Friday after also drawing on a $500 million line of credit to meet margin requirements for the Depository Trust & Clearing Corporation, which holds collateral for Robinhood’s bulk share buying.
The UPI contributed to this report.
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