Jim Cramer, host of Mad Money on CNBC and head of the CNBC Investing Club, pushed the financial services platform Robinhood Markets (HOOD) (7KY). Robinhood appears to be behind billionaire Warren Buffett’s bizarre Berkshire Hathaway trading volumes (BRK.A) (BRK.B).
Cramer’s tweet follows the revelation of a CNBC report, which explained the reason for a mysterious increase in trading of stocks like Berkshire Hathaway.
The Financial Industry Regulatory Authority (FINRA) issued a new ruling in 2017 that required brokers to report trading in fractional shares. Indeed, even if a fractional BRK.A share were traded, it would be reported as a complete transaction. Regardless of the value of the shares traded, each transaction had to be reported as a whole.
This rule was particularly amplified in 2021 when the frenzy of meme stocks and the general infatuation of retail investors led to a large number of split trades. Berkshire’s trading volumes have caught the attention of authorities as each BRK.A share is trading at a very high value, currently at $429,200.00, and has historically had very low trading volumes. But since 2021, there has been an unusual increase in BRK.A’s trading volumes due to split trades.
Cramer’s tweet was inundated with replies stating that no one uses Robinhood’s platform anymore. A few even joked and reminded him of when he liked HOOD stock after its IPO.
HOOD stock, at its close, has crashed around 73% since listing and is in the process of being acquired, likely by crypto exchange FTX. Meanwhile, FINRA is working to find an appropriate solution to the problem.