Bill Text: CA AJR6 | 2021-2022 | Regular Session | Introduced


Bill Title: Stock markets: Robinhood, Inc.

Spectrum: Partisan Bill (Republican 1-0)

Status: (Introduced - Dead) 2021-03-18 - Referred to Com. on B. & F. [AJR6 Detail]

Download: California-2021-AJR6-Introduced.html


CALIFORNIA LEGISLATURE— 2021–2022 REGULAR SESSION

Assembly Joint Resolution
No. 6


Introduced by Assembly Member Fong

February 16, 2021


Relative to financial institutions.


LEGISLATIVE COUNSEL'S DIGEST


AJR 6, as introduced, Fong. Stock markets: Robinhood, Inc.
This measure would urge the Congress of the United States to investigate the actions taken by Robinhood, Inc. with respect to restricting trade of specific stocks and would also urge the President of the United States to advance the cause of bringing more transparency to the stock market.
Fiscal Committee: NO  

WHEREAS, The American stock market offers investment opportunities for individuals and funds on Wall Street alike, allowing the buying and selling of shares of ownership of a publicly traded corporation; and
WHEREAS, GameStop Corp. is the world’s largest video game omnichannel retailer, traded on the New York Stock Exchange under the trading symbol GME; and
WHEREAS, The COVID-19 pandemic has compounded the decline of sales of physical copies of video games amid the popularization of the digital video game format and online shopping; and
WHEREAS, Wall Street investors and hedge funds have bet against GameStop on the stock market by short selling GME in anticipation of the stock’s decline; and
WHEREAS, Robinhood, Inc. is a financial services company that offers commission-free trading of the stock of individual companies, options, exchange-traded funds, and cryptocurrency, and offers cash management accounts; and
WHEREAS, In reaction to the heavy short selling of stocks, including GME, online traders using platforms, including Robinhood, Inc. began purchasing GME, thereby increasing the value of the stock dramatically; and
WHEREAS, The sharp increase in value of shorted stocks triggered a historic short squeeze in which investors with short positions were forced to buy the stock back, taking even larger losses amounting to billions of dollars; and
WHEREAS, Robinhood, Inc. restricted trades of highly volatile stocks, including GME, allowing investors only to sell the stock. This action received wide criticism as independent investors were stripped of their ability to trade; and
WHEREAS, The United States Securities and Exchange Commission has reported it is closely monitoring and evaluating the extreme price volatility in certain stocks’ trading prices and would review actions taken by regulated entities that may disadvantage investors or unduly inhibit their ability to trade certain securities; and
WHEREAS, There is concern that Robinhood, Inc. has historically not been transparent about revenue sources and not satisfying its duty of best execution; and
WHEREAS, Without the ability to freely trade stocks, small-time investors are at a significant disadvantage to Wall Street hedge funds. Trading in securities carries inherent risks that all investors assume when investing in the stock market; now, therefore be it
Resolved by the Assembly and the Senate of the State of California, jointly, That the Legislature calls upon Congress to formally investigate the actions taken by Robinhood, Inc. to restrict trading of specific stocks; and be it further
Resolved, That the Legislature call upon the President and his administration to advance the cause of bringing more transparency to our stock market system to ensure an equal and fair playing field for all investors; and be it further
Resolved, That the Chief Clerk of the Assembly transmit copies of this resolution to the President and Vice President of the United States, to the Speaker of the House of Representatives, to the Majority Leader of the Senate, and to each Senator and Representative from California in the Congress of the United States.
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