Texas AG Ken Paxton announces probe into Robinhood, Discord and hedge funds

Texas' top prosecutor said he was launching an investigation into the GameStop market surge Friday, accusing Wall Street "elites" of rigging the markets and corruption. "The US econ should be transparent, open," Paxton tweeted Friday afternoon. "This week’s coordinated corruption by a cabal of oligarchs shows it isn’t.” He added: “I’ll help fix that." The announcement comes amid a wild month for GameStop shares that saw massive increases in their price as retail investors took on Wall Street short-sellers – with much of the activity taking place on the Robinhood mobile app trading platform.

Discord is a text and voice communication app – which embroiled itself in the market controversy by banning a server dedicated to WallStreetBets, a Reddit forum whose users helped originate the viral GameStop craze. WallStreetBets has been pitted against hedge fund short-sellers, costing the financial professionals billions of dollars as amateur investors prompted GameStop shares to soar over the past month. Melvin Capital, a hedge fund with $12.5 billion in assets under management, was a big short-seller of GameStop but on Tuesday closed out its position in the video game retailer. The Wall Street Journal reported that Melvin lost 30% of funds and that two other hedge funds, Citadel LLC and Point72 Asset Management, invested an "emergency influx of cash" of $2.75 billion to stabilize Melvin. When Robinhood severely restricted trades involving GameStop shares this week, users blasted the move as corrupt and manipulative. Some critics have portrayed the drama as an attack by Wall Street elites on everyday Main Street investors.