Texas attorney general probes Gamestock trade curbs from Robinhood, others

01/29/2021

FILE PHOTO: Texas Attorney General Ken Paxton speaks outside the U.S. Supreme Court after justices heard arguments in a challenge by 26 states over the constitutionality of President Barack Obama’s executive action to defer deportation of certain immigrant children and parents who are in the country illegally in Washington, D.C., U.S. April 18, 2016. REUTERS/Joshua Roberts

WASHINGTON (Reuters) – Texas Attorney General Ken Paxton issued 13 civil investigative demands on Friday to Robinhood, Discord, Citadel and other trading apps that put curbs on stock trading, his office said in a statement the day after those curbs stalled a rally in shares of GameStop.

The CIDs, the civil equivalent of a subpoena, were sent following a week-long slugfest in which retail investors bid up shares of video game retailer GameStop and other out-of-favor companies, resulting in huge losses to big hedge funds that had shorted those stocks.

On Thursday, GameStop shares fell after Robinhood and other trading apps imposed the limits, a move that angered many elected officials and prompted calls for action from regulators.

“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 said in a statement.

The CIDs were sent to Discord, Robinhood Financial, Robinhood Markets, Robinhood Securities, Interactive Brokers, TD Ameritrade, TD Bank, E-Trade, WeBull Financial, Public Holdings, M1 Holdings, Citadel Financial, and Apex Clearing Corporation, Paxton’s office said in a statement.

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