Robinhood restricting GameStop trading is 'flat out criminal,' Barstool's Dave Portnoy says
They can't change the rules 'overnight without telling anybody,' he said
Barstool Sports founder Dave Portnoy criticized Robinhood for restricting trading in volatile stocks like GameStop, saying the broker caused its share prices to tank.
“They basically stole money from their own clients,” Portnoy said on FOX Business' "Varney and Co.,” adding that intentionally cratering the stock at the expense of customers is “flat out criminal.”
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Robinhood and other brokerage platforms, including TD Ameritrade and Interactive Brokers on Tuesday and Wednesday, restricted trading in shares of volatile stocks including GameStop, AMC Entertainment, Bed Bath & Beyond, BlackBerry and others, following an unexpected surge in volatility following some web postings on the popular Reddit message board WallStreetBets.
Portnoy said the coordination by people on social media sites like Reddit “definitely manipulated the stock price,” but also noted professional traders have “been doing the same thing for years.”
“You're telling me that analysts don't manipulate stock prices and drive them up and down to create buying opportunities and selling opportunities?” Portnoy asked host Stuart Varney. “I'm not saying what the new guys are doing is great, but let's not pretend the old guys haven't made billions and have yachts and mansions for doing this same exact thing.”
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Portnoy criticized Robinhood for changing the rules “overnight without telling anybody.” However, the Robinhood user agreement, which is required for everyone to sign before trading on the app, states that the company may at any time and without prior notice “prohibit or restrict” a user’s ability to trade.
Robinhood co-founder Vlad Tenev defended the pause of some trading in the volatile names in a tweet, stating those “requirements exist to protect investors and the markets.” The company on Thursday began allowing ”limited buys” of the previously restricted securities.
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As for Portnoy, told Varney that he put $2 million of his own money into headline-making stocks like AMC and Nokia.
“I was willing to lose it and put it on a poster board in my office for motivation, that I would bring Robinhood to its knees and that would be my motivation,” Portnoy said.
So far Portnoy is down about $200,000 on the trades, having clawed his way back from an earlier loss of around $700,000.
“I don't miss a 50-year storm,” he said.
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FOX Business’ Audrey Conklin contributed to this article.