Republicans, Democrats agree hedge funds benefit over average American investors

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Gamestop, Robinhood saga shows the 'fix is in': Josh Hawley

The GameStop stock trading saga prompted a rare instance of bipartisan synergy on Capitol Hill this week as lawmakers asserted that Wall Street hedge funds were being held to a different standard than ordinary Americans.

Much of the outrage stemmed from decisions by Robinhood and other mobile brokerage platforms to restrict transactions involving GameStock and other stocks favored by retail investors. While the platforms argued their decisions were an attempt to mitigate risk amid unprecedented volatility, critics suggested the restrictions could have been imposed to protect hedge funds that held short positions on the popular stocks. Robinhood and other platforms have denied the allegations.

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Politicians on both sides of the political aisle have called for congressional hearings and regulatory reviews to examine the actions of Robinhood and other platforms for potential wrongdoing. Progressive Democratic Rep. Alexandria Ocasio-Cortez of New York referred to the restrictions as "unacceptable," prompting rare agreement from a frequent critic, Republican Sen. Ted Cruz of Texas.

"We now need to know more about @RobinhoodApp’s decision to block retail investors from purchasing stock while hedge funds are freely able to trade the stock as they see fit," Ocasio-Cortez said. She quickly distanced herself from Cruz, tweeting that the Texas senator "almost had me murdered 3 weeks ago" during the Jan. 6 riot at the Capitol.

After briefly blocking users from purchasing more GameStop shares, Robinhood allowed limited buys of the stock in trading Friday. GameStop shares closed at $325, an increase of more than 300% since the start of the week.

Ocasio-Cortez wasn’t the only Democrat who took aim at Wall Street. Rep. Ro Khanna, D-Calif., called for an investigation into Robinhood’s handling of the situation.

"While retail trading in some cases, like on Robinhood, blocked the purchasing of GameStop, hedge funds were still allowed to trade the stock," Khanna said in a statement. "We need more regulation and equality in the markets. Instead of investing in future technologies to help America win the 21st Century, Wall Street poured billions into shorting this stock to crush this company and put workers out of business."

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Rep. Maxine Waters, D-Calif, chair of the House Committee on Financial Services, announced a hearing to examine "recent market instability."

"Hedge funds have a long history of predatory conduct and that conduct is entirely indefensible," Waters said in a statement.

Prominent Republicans also spoke out on the situation. Sen. Josh Hawley, R-Mo., said the GameStop trading scandal showed traditional hedge funds "don’t want any competition" from retail investors and casual day traders.

"These day traders, retail investors, they’ve got more criticism, more scrutiny than the people who crashed the entire financial market in 2008, and they got bailed out, the government bailed out all of those people," Hawley said. "I mean, it shows you that the fix is in."

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Donald Trump Jr. said the Robinhood’s action was the latest sign of a "rigged system" designed to benefit Wall Street over ordinary investors.

"It took less than a day for big tech, big government and the corporate media to spring into action and begin colluding to protect their hedge fund buddies on Wall Street," Trump Jr. wrote on Twitter.