Robinhood, the app that helped propel shares of GameStop to record highs last week, has said it was humbled as it defended its decision to temporarily suspend stock trades.
The tech start-up took out a one-page advert in the New York Times on Tuesday in an apparent attempt to explain what happened when it restricted some stock trading on Thursday last week.
Robinhood has said it struggled to meet capital requirements on purchases being made by Reddit users and others, as they pushed up GameStop’s share price - and punished Wall Street investors in the process, who had bet against the troubled retailer.
The move to suspend public trading prompted criticism from congressional lawmakers on both sides, amid a wider public backlash - with many claiming Robinhood was tied too closely to Wall Street.
Democratic senator Elizabeth Warren accused Robinhood of “abruptly changing the rules” by blocking the public from trading, and demanded answers in a letter to the company’s CEO, Vlad Tenev, and seen by CNN.
The Massachusetts senator went on to ask whether or not Mr Tenev, who Politico reported is now set to testify in front of Congress, was in violation of any laws or regulations amid recent or previous trading.
Pointing to the app’s practice of routing payments through Citadel Securities, a brokerage company backed by a billionaire, Ms Warren said recent trading "raises troubling concerns about its relationships with large financial institutions that execute its trades."
Robinhood, in response to criticism, said in Tuesday’s advert in the Times that “Simply put, Robinhood limited buying in volatile securities to ensure it compiled with deposit regulations.”
Readers were directed to a statement posted on the app’s website on Friday, which further defended Robinhood’s decision to suspend trading.
“It was not because we wanted to stop people from buying these stocks,” said Robinhood, but because the deposit amounts required by cleaning houses “were so large”.
Citadel Securities, the market maker, told CNN it has not "instructed or otherwise caused any brokerage firm to stop, suspend or limit trading or otherwise refuse to do business."
