From the more I have read, it wasn't really an issue of Robinhood not wanting to "let" people buy GME. It was overwhelmed by volume and couldn't cover the capital needed to clear the transaction per federal trading rules. There is a reason Robinhood raised a bunch of capital that night....because they had to in order to fund trading of these stocks. So maybe jumping ship on Robinhood is a little misguided based on what I perceived their intentions were. Here is a quote that I learned some things from-
No they disallowed the purchase (not the sale of existing positions) of certain stocks because they didn’t have the capital to effectuate the transaction if a customer wanted to buy the stock. Trades take two days to clear and since there is a specific formula (Courtesy of the 2009 Dodd Frank bill) partly based on volatility and partly based on the ratio of buys to sells in a stock whereby brokers need to advance a certain percentage of the capital required for the trade prior to settlement, Robinhood and others couldn’t fund any new buy orders of very volatile stocks where the buys far outnumbered the sells in a day. Brokerages cannot use client funds held in margin accounts to settle transactions. So the brokerage firm has to front the money unless the trade is made from a cash account. Usually the buys and sells of specific securities are somewhat close so that the capital required by the brokerage firm is small. However, the number of buys for certain names like GME so far outpaced the sells that the capital requirements to settle became so large Robinhood and the other undercapitalized brokers cut off all buy orders on those names. In this case the regulations worked and several brokerage firms didn’t go insolvent.
People love to glom onto any bit of “news“ to try to substantiate some sort of conspiracy. You’ve seen politicians like AOC and Ted Cruz, as well as guys like Chamath (who is trying to be a politician) and that moron Portnoy try to use this as some sort populist rallying cry in an attempt to curry favor with the public. None of them understand the dynamics of the situation and are using it, and those involved, to further advance their own agendas.
