New York Attorney General Tish James is “reviewing” activity on the stock-trading app Robinhood after the company drew harsh backlash Thursday for restricting the trading of several stocks that were promoted on a Reddit forum.
“We are aware of concerns raised regarding activity on the Robinhood app, including trading related to the GameStop stock. We are reviewing this matter,” James said in a statement.
James made the announcement after a class action suit was filed against the app in the Manhattan federal court, claiming Robinhood could potentially cost investors money for blocking trades of GameStop and several other stocks.
The app, which allows individuals to buy and sell stocks, put the brakes on trading for companies such as GameStop, BlackBerry and Nokia, after Reddit users started buying up shares at an enormous rate.
The Redditors bought the stock, in part, because word spread that hedge funds were planning to “short” the stocks, or bet on them to fail.
The move by Robinhood to stop offering the stocks sparked harsh backlash, including by Barstool Sports founder Dave Portnoy, who called on the founders of the app to do “prison time” for restricting the trades.
In a statement earlier Thursday, the app said it was restricting trading for several stocks “in light of recent volatility.”