Robinhood said Monday it was hit by a data breach earlier this month that exposed information on millions of customers and that hackers later demanded an extortion payment.

The trading platform said in a statement that the Nov. 3 attack allowed the unauthorized party to obtain a list of email addresses for about 5 million people and full names for another group of about 2 million people.

The company said the incident caused a "limited number of people," approximately 310 in total, to have their names, dates of birth and zip codes exposed. About 10 customers had "more extensive account details revealed," Robinhood said, without elaborating.

"We believe that no Social Security numbers, bank account numbers or debit card numbers were exposed and that there has been no financial loss to any customers as a result of the incident," the company said in the statement.

After Robinhood contained the intrusion, "the unauthorized party demanded an extortion payment," according to the statement. The company said it "promptly" informed law enforcement but did not indicate whether it complied with the extortion payment demand.

Shares of Robinhood were down about 3% in after-hours trading Monday.

The unauthorized party gained access to Robinhood's customer support systems by posing as a customer support employee by phone, the company said.

Robinhood said it is in the process of making "appropriate disclosures to affected people" and is continuing to investigate with the help of security firm Mandiant.

"As a Safety First company, we owe it to our customers to be transparent and act with integrity," Caleb Sima, Robinhood's chief security officer, said in the statement. "Following a diligent review, putting the entire Robinhood community on notice of this incident now is the right thing to do."

The decision by security markets to restrict trading on stocks like GameStop sparked a rare moment of unity between conservatives and progressives on Capitol Hill Thursday.

Lawmakers from across the political spectrum — from the left-wing progressive House caucus known as "The Squad" to right-wing Senators who identify as "Constitutional conservatives" — skewered platforms like Robinhood and TD Ameritrade, accusing them of siding with Wall Street elitists instead of Middle-Class America.

Rep. Rashida Tlaib, D-Michigan, a progressive Democrat and member of "The Squad," called for House Democrats to investigate Robinhood's decision to halt trading on GameStop stock.

"They're blocking the ability to trade to protect Wall St. hedge funds, stealing millions of dollars from their users to protect people who've used the stock market as a casino for decades," Tlaib said.

Rep. Alexandria Ocasio-Cortez, D-New York, a fellow "Squad" member and a member of the House Financial Services Committee, said she would support an investigation.

"We now need to know more about @RobinhoodApp's decision to block retail investors from purchasing stock while hedge funds are freely able to trade the stock as they see fit," she said.

Ocasio-Cortez's tweet prompted a response from Sen. Ted Cruz, R-Texas, who said he "fully" agreed.

It's rare to see Ocasio-Cortez and Cruz reach an agreement on social media. The two often spar on Twitter on topics like the Paris climate agreement and the pro-Trump riot at the U.S. Capitol.

Robinhood — a trading platform that says it aims to "democratize" market trading — announced on Thursday that it was restricting trades on GameStop, BlackBerry and several other stocks that have seen unsual activity in recent days due to "recent volatility."

The meteoric rise of GameStop stock was fueled by amateur or part-time traders who banded together on social media and used apps like Robinhood to spoil Wall Street hedge funds' bets that the retailer's stock would tank. Hedge fund investors who bet against GameStop lost billions of dollars this week alone.

The decision is also causing the New York attorney general to investigate.

This article provides information and education for investors. NerdWallet does not offer advisory or brokerage services, nor does it recommend or advise investors to buy or sell particular stocks or securities.

Amid all the freneticism of the Reddit-hedge fund battle, a simple fact seems to have gone unnoticed: It means very little to the majority of investors. Your 401(k) is probably fine, and your IRA is still doing its thing.

To fully understand why that’s the case, let’s look at how we got here, and what it means for average investors going forward.

What the hedge just happened?

Hedge funds are investment vehicles that pool money from wealthy individuals. They’re less regulated than the common mutual fund, giving the firms that manage hedge funds a bit more latitude to perform high-risk investing maneuvers.

One such strategy is short selling. When you “short a stock,” you’re betting the price of that stock will fall. You borrow shares from your broker, then sell them immediately. When the stock price falls, you buy the shares back, return them to the broker and pocket the difference in price as profit.

But if the stock price rises, you could be in serious trouble. Imagine selling the borrowed stock for $10, then watching its price rise to $50. You’re on the hook to return those shares, which means buying them back at the higher price and taking a loss. What happens if the stock surges to $400? That’s what hedge funds just found out.

GameStop + hedge funds + short selling

GameStop is a brick and mortar store that sells video games — hardly the paragon of a future-proof company. Some hedge funds believed the company was in dire straits, and that its stock price — which was around $10 in the fall of 2020 but had been trading at around $4 for most of the year — would fall. They shorted GameStop, expecting to make money when it did.

… and then there was Reddit

Reddit is basically a chatroom broken into groups by category, called subreddits. Members of one subreddit, known as WallStreetBets, are known for irreverently, self-deprecatingly and sometimes offensively posting their investment exploits — both good and bad.

When WSB members caught wind of the shorts against GameStop, they saw it as an opportunity to take on what they perceived as Wall Street greed through what’s known as a short squeeze. They started buying up GameStop stock, driving the price higher, knowing it could cause a potentially multimillion-dollar headache for the hedge funds that shorted the stock and would be forced to buy it back at the inflated price.

Further fanning the flames of Reddit vs. Wall Street, on Jan. 28, a handful of brokers — including the investing app Robinhood — temporarily restricted retail investors from trading several stocks, including GameStop, while hedge funds and other institutional investors carried on as usual.

Should I be concerned about my investments?

This whole calamity will sting some investors, but most likely not you. The ones who will lose the most from this will be the short sellers who were forced to cover their positions and speculators who bought in at an exorbitant price, according to Aaron Sherman, president of Odyssey Group Wealth Advisors in Lancaster, Pennsylvania.

“An average retail investor should not be impacted by this if they are invested in a well-diversified portfolio that appropriately reflects their risk tolerance,” Sherman said in an email interview.

He added that this particular phenomenon, which was centered around a few individual stocks, is a clear example of why diversification is so important.

“The best way to achieve market gains while limiting volatility is to invest in diversified low-cost funds that will not be unduly influenced by pricing abnormalities in one stock or another,” he said. “Taking part in these short squeezes is pure gambling and should not be a part of anybody’s investment strategy for retirement.”

And if you’re having FOMO for missing the action, there’s no guarantee that message-board intel would have turned into profit. “The ones who will benefit the most are the Reddit users that initiated the frenzy — if and only if they manage to exit their position at the right time,” Sherman said.

Simply put, most individual investors are unlikely to benefit from this, and equally unlikely to see a negative impact on their 401(k), IRA or other long-term investment portfolio.

So, I shouldn’t let this sideline me?

If you’re not currently investing because you’re worried it’s too risky, this kind of news story doesn’t help. According to Sherman, the whole episode does offer an interesting truth: A group of people with a specific agenda can, in fact, influence the price of a stock one way or another.

The key word there is “stock.” Investing in individual stocks, especially based on an online tip, is always going to be risky. But that’s no reason to sit out the stock market.

“That doesn’t mean that the market as a whole is not safe to invest in, but rather that investors should invest in well-diversified funds (exchange-traded funds and mutual funds) rather than exposing themselves to the whims of a small group of investors in an individual stock,” Sherman said.

By putting together a long-term investment plan built on highly diversified ETFs and mutual funds, investors can take solace in knowing their retirement funds or savings won’t be wiped out by concentrated and rare market disturbances — including online stunts.

Disclosure: The author held no positions in the aforementioned securities at the time of publication.

More From NerdWallet

Chris Davis writes for NerdWallet. Email: cdavis@nerdwallet.com.

There's a silver lining for one nonprofit with the frenzy around the Robinhood stock trading app that's now facing dozens of lawsuits after the company restricted trading on GameStop.

Robin Hood, an organization that has been fighting poverty in New York City for 32 years, is welcoming the new attention.

The organization initially got confused for the stock trading app on social media, which led to some angry comments directed at the nonprofit. But it has also led to an increase in donations when people realized the nonprofit's mission.

Their CEO, Wes Moore, says they've received hundreds of donations in the last few days from across 29 states.

“It’s also provided an opportunity for people just to learn more about the work, to learn more about why an organization like ours exists and why this issue of poverty, this issue of entrenched poverty in many ways is something that everyone should be spending and focusing their time,” said Moore.

The CEO says the last year has really shown the extent of the challenges we were already facing with poverty.

Robin Hood launched a relief fund during the pandemic that has been supporting social services in New York City and offering cash assistance.

“A core focus of our work is not just addressing the very human need right now, but it's also understanding the fact that the reason that we have such a significant human need oftentimes is because of holes in policies,” said Moore.

One policy they're advocating to change right now is the child tax credit. Some families are missing out on this, because their earnings are too low to qualify.

President Joe Biden’s stimulus proposal would fix this by expanding the credit for one year and making it fully refundable.

Robin Hood is also pushing for the credit to be permanent.

Trading platform Robinhood lifted restrictions on trading shares of GameStop Corp. and AMC Entertainment Inc. late Thursday.“There are currently no temporary limits to increasing your positions,” Robinhood said on its website Thursday night.The news comes following a roller-coaster period last week. Highly volatile trading of GameStop and other stocks erupted when amateur traders, many gathering on the Reddit forum r/wallstreetbets, took advantage of the heavy short selling on underdog stocks like GameStop, and invested heftily, spoiling short-seller's positions.Robinhood users became irate at the service, some even bringing lawsuits, when the trading platform restricted trading of 50 highly volatile stocks that were majorly shorted. Robinhood eased up on the restrictions Sunday, bringing that number down to eight. Still, GameStop and AMC remained on their list. The relaxing of restrictions comes as GameStop, AMC and other stock, once propped up by the hype of mass-investment, seem to be coming down.GameStop had a 500-share purchase limit earlier Thursday, and AMC had a 5,500-share limit.