The stock trading and investing app Robinhood has claimed that it didn’t sell any of its customer’s shares in GameStop, IMC without their consent. Which is contradicting the claims made by its users.
Many users have reported that the app has sold its shares without giving a 24-hour notice. According to the users, there has been a higher than usual trading activity all this week in these companies. Some of them have even shared screenshots of the Robinhood app confirming their shares have been sold.
A spokesperson from Robinhood has made the statement that these small sellers are wrong about how their shares were sold. He also added that all the claims that say Robinhood proactively sold their customer’s shares outside of standard margin-related sell-outs or options retirement procedures are false.
The spokesperson said that Robinhood has warned some of its investors that have options in GameStop and AMC, that it may automatically sell their stakes to reduce risks. But, according to these investors, they didn’t have options in GameStop or AMC and hadn’t purchased it on margin. According to them, they have purchased these shares outright and were planning to hold onto them.
Margin orders take place when an investor borrows money from a broker (in this scenario, Robinhood) to complete a sale. In such cases, the broker can sell of investor’s share, if they believe the investors can’t pay them back. And according to Robinhood, most of its actions have been calling in options to purchase shares. But many of the investors claim that they had full ownership of the shares. So, selling these shares was an unusual move.
According to the sources, the reason is unknown as to why the stakes of the users were sold off. But, it’s clear that Robinhood has gained many unhappy customers. To know more such news, keep reading Mangoster’s blog.
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