Robinhood also contacted existing investors, which include hedge funds Sequoia Capital and Ribbit Capital, about emergency funding, according to the New York Times. “With individual volatile securities accounting for hundreds of millions of dollars in deposit requirements… we had to take steps to limit buying in those volatile securities to ensure we could comfortably meet our requirements,” it said. In a blog post late on Friday night in the US, Robinhood said the amount it had to deposit with the clearing house was so large that it had to limit buying in certain securities. Robinhood allowed buying to resume after tapping investors to draw down at least several hundred million dollars via a credit facility from banks led by JP Morgan and including Morgan Stanley, Goldman Sachs and Barclays.Ī spokesperson for Robinhood early on Friday described the $1bn (£730m) injection as a “strong sign of confidence” that will help it “further serve our customers”. Losses are unlikely to be covered by the Financial Services Compensation Scheme #wallstreetbets- Financial Conduct Authority January 29, 2021 Volatile markets are unpredictable and mean you can quickly lose money. We’re warning UK investors in certain US listed shares which are being discussed online to use extreme caution. The company’s shares had whipsawed a day earlier, finishing the day 44% lower after Robinhood barred users from buying more stock, threatening the Reddit rebellion.

The decision to permit what Robinhood said would be “limited buys” resulted in GameStop’s shares climbing more than 67.6% on Friday, taking its notional value to more than $22bn, nearly 80 times what it was worth this time last year. The app, weaponised by activist small investors to trap hedge funds in a “short squeeze” that has cost them $20bn on paper by some estimates, had suspended buying of stocks such as GameStop, cinema chain AMC and BlackBerry on Thursday.īut it secured a $1bn (£730m) cash injection from its backers on Thursday evening, which the company said it required to allow its users to resume their buying spree, which began on the WallStreetBets forum of chat forum Reddit. Shares in companies including videogame retailer GameStop soared again on Friday, as an army of small investors taking aim at Wall Street regained access to amateur share trading platform Robinhood.

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