Robinhood CEO says limited trade in GameStop to protect firm and customers

The move drew fierce responses from investors and US politicians

FILE PHOTO: Vlad Tenev, co-founder and co-CEO of investing app Robinhood, speaks during the TechCrunch Disrupt event in Brooklyn borough of New York, U.S., May 10, 2016. REUTERS/Brendan McDermid/File Photo
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Online broker Robinhood restricted trade in about 13 highly volatile stocks such as GameStop and AMC Entertainment to protect the company and its customers, chief executive Vladimir Tenev said.

The app, popular with young investors for its simplicity, has been at the heart of the day-trading mania that has followed calls on social media to buy stocks heavily shorted by hedge funds. The restrictions allowed customers to sell but not buy.

"We absolutely did not do this at the direction of any market maker or hedge fund ... the reason we did it is because Robinhood as a brokerage firm, we have lots of financial requirements," Mr Tenev said in an interview with CNBC.

"In order to protect the firm and protect our customers, we had to limit buying in these stocks," he said, adding it was a "difficult decision".

The company had earlier announced the restrictions, and raised margin requirements, in a blog post which said limited buying would be available on Friday. The move has drawn the ire of angry customers and even politicians.

"We understand our customers are upset, we are doing what we can to re-enable buying in these names," Mr Tenev said.

"We want to be clear in the communications, and I own that we should have been out there a little bit sooner."

Other trading platforms took steps similar to Robinhood's. TD Ameritrade confirmed to CNET that it had restricted trades of GameStop.

Webull allowed users to trade GameStop after blocking activity for some time on Thursday.

"We stand in support of our customers and the freedom of retail investors to shape their own financial future," Robinhood said.

"Democratising finance has been our guiding star since our earliest days.

"We will continue to build products that give more people, not fewer, access to our financial system."

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