U.S. House Financial Services Committee Report: Game Stopped
On January 28, 2021, shortly before the market opened and without notice to its customers, Robinhood designated GME and a handful of other securities as "position closing only" ("PCO"), meaning that customers, could not purchase additional shares in those stocks (the "PCO Trade Restrictions").
Following the events of January 28, 2021, the United States House Financial Services Committee (the "House Committee") began an investigation into Robinhood's actions. In June 2022, the House Committee concluded its investigation and published a detailed report with its findings (the "House Committee Report"). Specifically, the House Committee Report concluded the following:
"Robinhood exhibited troubling business practices, inadequate risk management, and a culture that prioritized growth above stability during the "Meme Stock Market Event" of January 2021…This was not simply a mistake of operational balance sheet management by Robinhood, but a more fundamental failure to adequately capitalize the firm, maintain adequate liquidity arrangements relative to the firm's business model and risk profile, and accurately predict and prepare for NSCC deposit requirements as set forth in publicly available rules and based on customer trading activity."
United States House Financial Services Committee (June 2022)
The full report can be read here.