GameStop - Backlash by Amateur Investors against Trading 212

Whilst it is well known that the global markets are volatile and unpredictable, the clamour surrounding GameStop regarding the amateur day-traders and professional investors is noticeably louder and has reached the ears of the regulators and the new President’s economic team led by Treasury Secretary Janet Yellen who is said to be monitoring the situation. There have also been calls for the regulators NYSE to step in to calm the situation.

The issue hinges on shorting or short selling, the type of trading both the amateur day-traders and professional investors have been applying to GameStop and the fact that the amateur investors were blocked from trading by the portals and platforms they were trading through, leaving the field open to the professionals alone to make money.

Amateur investors have every right to believe that illegal market manipulation may have scuppered their trading opportunities.

Joanna Bailey, an associate in the finance and banking litigation team says “the platforms that the amateur investors were trading through, such as Trading 212, appear to have breached their agreements by blocking accounts and preventing trading.” Joanna further commented, “I am aware of a considerable number of individuals who have been blocked by Trading 212 and now face heavy losses.”

All market trading comes with the caveat that investments can go down as well as up but it is a reasonable expectation that the opportunities to trade are even and apply to all.

Shorting is a fast paced risky type of trading where shares are borrowed from the owner, for a fee, then sold by the borrower when the price is high and subsequently bought back when the price drops and then returned to the original owner; the borrower keeps the profit made between selling and buying back the shares. The trade is time constrained as the borrowed shares must be returned within a designated time frame. In the case of GameStop the platforms appear to be creating an advantage for the professional investors by preventing the day-traders from trading. This amounts to manipulation of the markets.

If your account was blocked by Trading 212, Giambrone’s well-regarded finance and banking litigation lawyers can assist amateur investors that have been excluded from their accounts or affected in any other way, to obtain accountability and compensation for breaches of contract. The lawyers in Giambrone’s finance and banking litigation team believe that platforms similar to Trading 212 that have blocked accounts are flouting the law and can be held to account.

Regardless of the amount invested or whether the actual impact of being unable to trade was significant or slight Trading 212’s breach was the same and each person affected is entitled to be compensated.

The activities of the past few days have revealed a need for a review of the regulations governing the markets at the very least. For some people, the actions by the trading platforms have caused substantial financial damage from which it may be hard to recover. The majority of the platforms that blocked accounts have now bowed to the resulting uproar and reopened the accounts they blocked. Whilst this removes concerns about the safety of the money in the account, it does not put the amateur traders back in the same position as opportunities to trade and obtain the best deal are now lost.

For more information on Trading 212 related to GameStop please click here.