Texas AG Ken Paxton says financial services companies shouldn’t limit stock trades
Corporations shouldn’t be able to suspend stock trading that’s spurred skyrocketing share prices for companies like Grapevine-based GameStop, says Texas Attorney General Ken Paxton.
Stock prices for GameStop, Fort Worth-based American Airlines and a handful of other publicly traded companies have seen increases in recent days, after users of the social media platform Reddit encouraged each other to invest in the businesses on the stock market.
Robinhood and other brokerages limited trading in the companies’ stocks, drawing the ire of Paxton.
“Wall Street corporations cannot limit public access to the free market, nor should they censor discussion surrounding it, particularly for their own benefit,” Paxton said in a Friday statement.
Paxton on Friday issued 13 Civil Investigative Demands to companies related to “the prohibition of certain stock purchases, requiring higher margin reserves for trading certain companies, and suspending chat platform activity,” according to an announcement from his office.
Paxton is directing the companies to release documents related to the recent stock market events.
“This apparent coordination between hedge funds, trading platforms, and web servers to shut down threats to their market dominance is shockingly unprecedented and wrong. It stinks of corruption,” Paxton said. “I’m hopeful that these companies will step up and cooperate with these CIDs in order to clear any confusion over why stock purchases were forcibly closed and why even conversation around these stocks was silenced.”
A spokesperson for American Airlines declined to comment. Representatives from GameStop did not immediately return requests seeking comment.
Paxton isn’t the only politician weighing in on the Redditor-Wall Street feud.
Democratic and Republican members of Congress have condemned the trade halts, and said they’ll hold hearings related to the market’s commotion, according to CQ-Roll Call.
Robinhood on Thursday said that amid “extraordinary circumstances in the market” the company made “a tough decision today to temporarily limit buying for certain securities.”
“Starting tomorrow, we plan to allow limited buys of these securities. We’ll continue to monitor the situation and may make adjustments as needed,” the Thursday statement reads. “To be clear, this was a risk-management decision, and was not made on the direction of the market makers we route to. We stand in support of our customers and the freedom of retail investors to shape their own financial future.”
Paxton, who has served as Texas Attorney General since 2015, is under indictment on felony charges of securities fraud.
