’How Is That Not Rigging The Game?’ CNN’s Poppy Harlow Questions Ethics Of Cutting Off Reddit Investors But Not Hedge Funds
CNN’s Poppy Harlow reacted to the latest developments in the GameStop stock trading saga, openly questioning whether it was fair for trading apps like Robinhood to restrict trading by individual Reddit investors, when hedge funds are not being restricted.
Harlow made the comments in a segment on CNN Newsroom with CNN’s chief business correspondent, Christine Romans.
Harlow observed that “something remarkable” had been happening lately with GameStop’s stock, as the company had been struggling for years to compete with online video games sellers but the stock had skyrocketed up 2500% so far in 2021.
“This morning, something huge happened,” said Harlow. “And that’s this trading app Robinhood just halted anyone’s ability to buy GameStop, to buy AMC Movie Theaters, to buy Nokia stock. Can you explain why it matters so much, and also, isn’t this really just a pushback against the establishment?”
“It absolutely is a pushback against the establishment,” agreed Romans. “It’s almost as if the social media platforms, there’s this online populism that’s pushing back at the Wall Street insiders and the Wall Street elite, and they’re actually piling on into some of these stocks to really hurt the professional short sellers. And the more these stocks go up, the more the big guys are getting creamed and losing billions of dollars. So it’s being cheered as this democratization of Wall Street.”
Romans had serious concerns for these Reddit investors, noting that the online brokers weren’t charging trading fees and stories were beginning to circulate about people making tens of thousands of dollars on their GameStop investments.
“Buyer beware,” warned Romans. “I’m really worried here as they put restrictions in on what you can buy and when you can buy it that when the music stops, you’re not going to have a chair. Please be careful out there. This is a big game that’s being played on some of these social media sites, and I love the little guy getting in there and beating the big guns when they can, but just be careful.”
“The get poor stories always outnumber the get rich stories in these scenarios,” said Harlow’s co-host Jim Sciutto.
“But how is it fair for them?” asked Harlow. “Reddit is saying we want to protect our investors. But if you cut them off from making the moves they want to make with their own money, for whatever reason they want to make it and you don’t cut off the hedge funds and you don’t cut out Wall Street, how is that not rigging the game?”
“That’s exactly what people are complaining about this morning,” said Romans. “Why is it distortion when it’s small traders banding together and buying up a stock where they may see legitimate glimmers of hope about a restructuring but it’s not gaming the system when a short seller can sell shares of a company they don’t even own and punish those investors, including retirement funds that may be invested in a company?”
Watch the video above, via CNN.
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