SINGAPORE (Reuters) – Online broker Robinhood restricted trading in about 13 highly volatile stocks such as GameStop and AMC Entertainment to protect the company and its clients, Chief Executive Vladimir Tenev said Thursday.
Popular with young investors for its simplicity, the app was at the heart of the day trading mania that followed calls on social media to buy stocks heavily shorted by hedge funds. The restrictions allowed customers to sell but not buy.
“We definitely didn’t do this under the direction of a market maker or hedge fund … the reason we did it is because Robinhood as a brokerage firm has a lot of financial requirements,” Tenev said on CNBC.
“In order to protect the company and protect our customers, we had to limit the purchase of these shares,” he said, adding that it was a “tough decision.”
The company had previously announced the restrictions and increased margin requirements in a blog post stating that limited purchases would be available on Friday. The move has sparked the ire of angry customers and even politicians.
“We understand our customers are upset, we are committed to making buying these names possible again,” said Tenev.
“We want to be clear in communication, and I think we should have got there a little earlier.”
Reporting by Tom Westbrook; Edited by Shri Navaratnam and Stephen Coates