(Bloomberg) -- The Securities and Exchange Commission is allowing certain early investors in Robinhood Markets Inc. to sell a portion of their holdings.
The move applies to some shares held by investors who pumped additional funds into the company to avert a liquidity crunch after the late January surge in meme stocks such as GameStop Corp. The SEC's approval took effect at 4:30 p.m. Wednesday in New York, in line with a request Robinhood made last week, according to a filing.
“Significant amounts of Robinhood shares will be unlocked in the coming months, a normal course following an IPO, but a course that we see potentially further pressuring Robinhood's share price,” JPMorgan Chase & Co. analysts Kenneth Worthington and Samantha Trent said in a Sept. 29 note to clients.
The investors won't be allowed to sell any of affected shares before the company reports third-quarter results on Oct. 26. They also agreed to hold half of those shares until 28 days after receiving the SEC's blessing, Robinhood said Friday in a statement.
Read more: Robinhood Rescuers Plot Sale After $5.4 Billion Gain This Year
Shares of the Menlo Park, California-based brokerage rose 1.2% to $41 at 10:40 a.m. in New York, extending their gain since the firm's July initial public offering to 7.9%.
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