Robinhood CEO says it limited buying in GameStop to ‘protect the firm and protect our customers’

ANASTASIA ZYG


Robinhood CEOs Baiju Bhatt and Vlad Tenev.

Source: Robinhood

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Robinhood CEO Vlad Tenev said Robinhood’s move to stop trading in certain speculative names was in the best interest of the company and its millions of users.

“In order to protect the firm and protect our customers we had to limit buying in these stocks,” Tenev told CNBC’s Andrew Ross Sorkin Thursday evening.

Amid a wild week of speculative retail trading, Robinhood on Thursday restricted trading in thirteen equities, including GameStop and AMC Entertainment. The free stock trading pioneer only allowed clients to sell positions, not open news ones, in certain securities, raised margin requirements, and even said  it would close out some positions automatically if the client was at risk of not having the necessary collateral.

Robinhood then said after the closing bell Thursday that it would allow limited buying of restricted securities on Friday.

The broker’s decision was met with outrage from its band of loyal retail investors; however, Robinhood explained that the move was made to comply with capital requirements mandated by the SEC for broker dealers.

Robinhood, which is expected to go public sometime in 2021, reportedly tapped some of its credit lines, people familiar with the matter told CNBC.

GameStop shares closed down 44% on Thursday after Robinhood restricted trading and then jumped more than 60% in after hours activity following the decision to ease the restrictions.

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