The hearing convened seven expert witnesses to discuss proposals to reform U.S. stock market structure following extreme volatility in so-called meme stocks like GameStop Inc. The chiefs of Robinhood, Reddit, Citadel and Melvin Capital, are headed to Washington for Thursday’s highly anticipated GameStop hearing at the U.S. Congress. "There will be closer monitoring of message boards," he said. Last Friday, Congresswoman Maxine Waters (D-CA), the chairwoman of the said committee, announced the following names to testify as witnesses to the hearing entitled, “Game Stopped? But he was somewhat evasive when Congresswoman Madeleine Dean asked him to elaborate. Congressman Anthony Gonzalez pointed out that if Robinhood did not impose those restrictions, the clearinghouse would have stepped in and liquidated unsettled trades. In this image from video provided by the House Financial Services Committee, Vlad?Tenev, chief executive officer of?Robinhood?Markets, Inc., testifies during a virtual hearing on GameStop … Melvin ultimately accepted a $2.75 billion cash infusion (don't call it a bailout, according to Plotkin) led by rival hedge funds Citadel and Point72. Viewers can watch the livestream on The House Committee Financial Services’ YouTube channel. “You admitted to making mistakes," Dean said. House committee holds hearing on GameStop 01:50 Lawmakers grilled Robinhood CEO Vlad Tenev for more than five hours Thursday over the online brokerage firm's role in … “These are elements that Robinhood does not have. “The concept that we don’t have equal rights as citizens to invest has always troubled me.”. During his testimony, Robinhood CEO Vladimir Tenev admitted that the company made some mistakes during the meme stock trading frenzy. 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Tlaib noted that such a tax would raise nearly $800 billion over 10 years, an estimate that is backed up by a 2018 report by the nonpartisan CBO. It was a worse performance than the broader market, including the small-cap Russell 2000 index that GameStop is a member of, which also closed in the red. Following the example of the February House Financial Services Committee GameStop hearing, senators are likely to probe the question of whether financial regulators should make rule … "I don't think investors like myself want to be susceptible to these dynamics," he said. The spirited and contentious GameStop hearing seemed to freeze in time when Rep. Emanuel Cleaver II (D-Mo.) Within a few hours, Robinhood managed to persuade the clearinghouse to lower its request to $1.4 billion, and the app imposed controversial restrictions on GameStop and 12 other stocks. The chief executives of Reddit, Robinhood, electronic-trading firm Citadel Securities and hedge fund Melvin Capital will attend. Congresswoman Rashida Tlaib and billionaire Ken Griffin got into a fiery exchange over whether or not to tax financial transactions. Illinois Rep. Sean Casten took Robinhood to task with a polite but devastating critique, highlighting the suicide of investor Alex Kearns. “Zero commissions does not mean zero costs to investors, it just means zero disclosed costs. That may ultimately create a powerful narrative boost for him as he faces down a class-action lawsuit alleging that his YouTube videos constituted bad financial advice, a claim Gill refuted calmly and diplomatically by returning to his core talking point: He likes the stock. "Would you be willing to commit to voluntarily pass on proceeds of payment for order flow to Robinhood customers?" And I think the whole industry will have to adapt," Melvin Capital CIO Gabe Plotkin said. But, he claimed, Robinhood's model has become the standard industrywide. Between CEO Gabriel Plotkin's bland office backdrop and his rather small size in the video frame, it sometimes appeared as if he were deliberately seeking to blend in with the environment in hopes of being forgotten. and Express Inc. Please enable JavaScript for a better experience. Griffin, not surprisingly, is not a fan of a financial transaction tax. Payment for order flow, a practice used by Robinhood, was also scrutinized during the hearing. Republicans on the committee were opposed to calls for new regulations on trading apps like Robinhood, or for calls for reform of the system of payment for order flow. Rep. Alexandria Ocasio-Cortez clashed with Robinhood CEO Vladimir Tenev over whether Robinhood investors are truly trading for free on the platform, alleging that the company is simply "hiding the cost" from retail investors by subsidizing it with payment for order flow. Robinhood CEO Vlad Tenev apologized during a Congressional hearing in February as members of Congress excoriated him, and the firm is facing dozens of lawsuits. If so, it seemed to have worked. Robinhood CEO defends actions in GameStop saga at hearing By Associated Press | PUBLISHED: February 18, 2021 at 8:07 p.m. | UPDATED: February 18, 2021 at 8:07 p.m. Robinhood C.E.O. Robinhood CEO Vladimir Tenev testified before the House Financial Services Committee on February 18, 2021 during the GameStop hearing. Restaurants and other businesses hired the most workers in March in seven months as the U.S. added 916,000 new jobs, signaling the economy is primed for a period of rapid expansion again. -1.24%, Instead, he called on the Securities and Exchange Commission to reduce regulations and eliminate the accredited investor definition, which bars investors who earn less than $200,000 per year or have less than $1 million in wealth from purchasing shares of private companies. “I was quite honestly surprised at how easy it was to begin making complex options trades,” said Alexis Goldstein, senior policy analyst for Americans for Financial Reform who formerly held positions on the equity trading derivatives desks at Merrill Lynch and Deutsche Bank. Democrats took aim at aspects of zero-commission broker Robinhood at a House Financial Services Committee hearing Wednesday, calling on regulators to consider banning the practice of payment for order flow and to reign in so-called gamification features of the app which critics say encourage users to trade more frequently than is financially wise. It seems to have been a tough day for Robinhood and Citadel Securities in particular, with lawmakers from both parties aggressively questioning both executives over whether their businesses do more harm than good. The chief executive of the online brokerage firm Robinhood, Vlad Tenev, faced anger from members of Congress from the opening moments of the House Financial Services Committee hearing on GameStop. Well, for starters, Plotkin is going to pay more attention to the chatter on WallStreetBets. It will also be streamed on C-Span and CNET YouTube channels. GameStop hearing paints Silicon Valley as public enemy #1. Should I retaliate. The game retailer’s stock has risen from an intraday low of $38.50 on the day of the hearing to more than $200 as of Tuesday’s close. AMC Entertainment Holdings Inc. AMC, “The gamification drives you to this, but also the illusion that Robinhood is able to create that there’s no cost to you because there’s no commission.”. ... Robinhood CEO Vlad Tenev apologized at a House hearing Thursday for the confusion caused by his platform's decision to restrict trading of certain "meme stocks," while admitting he did not handle the situation perfectly. The implication, Ocasio-Cortez said, was that trading on Robinhood isn't truly free after all. "We firmly believe a financial transaction tax would injure Americans trying to save for retirement," Griffin said. The idea is that revenue could then be invested in infrastructure or other programs aimed at reducing inequality. Robinhood ignited a firestorm last month when the free trading app suspended purchases of GameStop, AMC and other stocks that were sent to … “When you consider what gamification actually means, it includes elements like badges, leaderboards, points or other forms of competition,” Jacqueline Ortiz Ramsey, a Robinhood spokesperson told MarketWatch. Olivier Douliery/AFP via Getty Images The Senate Banking Committee on … Robinhood CEO Vlad Tenev admitted that the app did not have the liquidity needed to meet an early-morning demand from its clearinghouse for $3 billion on January 28. House GameStop Hearing Delves Into Robinhood, Reddit And WallStreetBets The House is taking up immigration changes this week. So it’s a bit of a stretch to say that a modern interface somehow equates to gamification.”. Posted on February 26, 2021 The U.S. House Committee on Financial Services will hold a second hearing on the Wall Street trading debacle that involved GameStop, Reddit, Robinhood and … Gonzalez said this would have been an "enormous catastrophe for Robinhood. Copyright © 2021 MarketWatch, Inc. All rights reserved. GameStop hearing live: Robinhood CEO and others in trading saga testify before Congress. That kind of intel could have allowed Melvin Capital to unwind its bets against GameStop before that company's shares skyrocketed. Indeed, Wall Street is keeping very close tabs on WallStreetBets. The hearing came after an unprecedented series of events upended financial markets as an army of individual investors using do-it-yourself trading platforms such as Robinhood loosely organized on a Reddit forum and sent stock for the struggling retailer GameStop soaring. The chief executives of Reddit, Robinhood, Citadel and Melvin Capital, along with the Reddit poster who spearheaded the GameStop buying frenzy, were all in attendance at the hearing … which resulted from a short squeeze in those stocks earlier this year. [ “Democrats are using GameStop to justify more regulations, greater restrictions and put more costs onto businesses and everyday investors,” said Rep. Patrick McHenry of North Carolina, the ranking Republican on the panel. Robinhood ignited a firestorm last month when the free trading app suspended purchases of GameStop ( GME), AMC ( AMC) and other stocks that were sent to … "Specifically, what mistakes did you make?”. Democrats are … The company's shares tumbled 11.4% and closed at $40.69, near the lowest point of the session. GameStop shares went to the moon and Melvin Capital turned to rivals for a lifeline. At times, Gill was even directly praised by members of Congress for his success and his initiative. "We just can't live in a world where my constituents could have had their shares liquidated without their consent.". Several witnesses at the hearing argued Democrats concerns were valid. Lawmakers will … -8.33% WASHINGTON (AP) — The CEO of Robinhood defended the trading platform to Congress Thursday for its actions during the GameStop trading saga, while apologizing to … The US House Financial Services Committee held a hearing about volatility in GameStop … +0.86%, Welcome to TOPLive. Robinhood's role in GameStop stock spike scrutinized by Congress. Tlaib did not buy that explanation and criticized Wall Street broadly. By Matt Egan, Brian Fung and Clare Duffy, CNN Business. Advocates of the accredited investor rules say that instead of allowing more Americans to invest in companies that aren’t required to publicly disclose financial information, the SEC should make it more difficult for companies to remain private for longer. The official unemployment rate slipped to 6% from 6.2%. The hearing convened seven expert witnesses to discuss proposals to reform U.S. stock market structure following extreme volatility in so-called meme stocks like GameStop … Who Wins and Loses When Short Sellers, Social Media, and Retail Investors Collide.” quite the lineup on Thursday at the Robinhood/Gamestop hearing. On Feb. 18, Rep. Alexandria Ocasio-Cortez (D-N.Y.), a leading critic of Robinhood’s role in the GameStop trading, pressed Vlad Tenev on his business model. “I do think there are a lot of questions in the ways that Robinhood may be enticing people who may not have the needed expertise to trade, for example, options strategies where you can lose a lot of money.”, Robinhood disputes the notion that its app has gamification features that encourage overuse. Shares of AMC and Express are up more than 135% an 90%, respectively, over that same time. Faces Scrutiny From House Lawmakers Vlad Tenev, the chief executive of Robinhood, apologized for temporarily limiting trading of GameStop … "At that exact moment we would not have been able to post the $3 billion in collateral," Tenev said. Reddit and Keith Gill, however, got the opposite treatment. GME, "It would not have been a good situation for the firm or the customers," Tenev said, adding that it would have caused a "total lack of access to markets" for users. Dennis Kelleher, president and CEO of Better Markets, a financial reform advocacy organization said that Robinhood’s “primary function is not to get people to invest, but to get people to trade,” arguing that the system of payment for order flow, whereby brokers are paid by market makers for the privilege of executing their customer orders, creates a conflict of interest. asked the chief executive of Robinhood about the death of a 20-year-old customer last year. Ocasio-Cortez asked. The hearing will take place on Thursday, Feb. 18, 2021, at 12 p.m. ", "I believe a vulnerability was clearly exposed in your business model and perhaps in the regime that governs your capital requirements," he said. early-morning demand from its clearinghouse for $3 billion, short interest on GameStop was an unthinkable 140%. Robinhood CEO defends actions in GameStop saga at hearing By MARCY GORDON and ALEX VEIGA February 18, 2021 WASHINGTON (AP) — The CEO of Robinhood defended the trading platform to Congress Thursday for its actions during the GameStop trading saga, while apologizing to customers for restricting their ability to trade at the height of the frenzy. The chief executives of Reddit, Robinhood, Citadel and Melvin Capital, along with the Reddit poster who spearheaded the GameStop buying frenzy, were all in attendance at the hearing … While the hearing is chugging along, the closing bell rung on Wall Street and it wasn't a pretty day for GameStop (GME). The main cost is the spread: the difference between the bid and the ask,” said Democratic Rep. Brad Sherman of California. Thinknum Alternative Data recently built and launched a tool that provides hedge funds and investment banks a ranking of the most-mentioned stocks on WallStreetBets. Shares of GameStop have fared well since the committee grilled Robinhood co-CEO Vlad Tenev; Ken Griffin, founder of the hedge fund Citadel and market maker Citadel Securities; and GameStop booster Keith Gill on Feb. 18. EXPR, Robinhood was recently in the news over a controversy about restrictions enacted after an unexpected boost in GameStop trading. ET. Read the transcript of the full hearing here. Melvin Capital also received some scrutiny, but far less than Robinhood and Citadel. His high-speed trading firm, Citadel Securities, would be hurt by the levy. My aunt took over from me as my grandmother’s power of attorney and executor of my grandfather’s $1.3 million estate. How? The hearing offers Robinhood a chance to cool down customers’ conspiracy theories about why it restricted trading on stocks such as GameStop and cinema operator AMC, right at the peak of the frenzy. Melvin Capital learned a very painful lesson when the hedge fund was blindsided by an army of Reddit traders. At one point, the short interest on GameStop was an unthinkable 140% -- a scenario that Plotkin said is unlikely to be repeated. “I concur that the accredited investor rules are outdated,” said Alan Grujic, CEO of All of Us Financial, a zero-commission trading application that competes with Robinhood. "Us at Melvin, we'll adapt. The U.S. House Committee on Financial Services conducted an extensive hearing into the GameStop (GME) - Get Report trading frenzy Thursday, hearing … Tenev balked at the question several times before ultimately pointing out that payment for order flow "allows for commission-free trading.". Executives from Robinhood Markets, Citadel Securities, Melvin Capital and Reddit are expected to testify before the House Financial Services Committee about the … Kelleher said that features on the Robinhood app, like the use of push notifications and colorful and engaging graphics are “scientifically designed to short circuit and cut out the thoughtful process that people engage in balancing risks and rewards.”, Of particular concern to witnesses was the ease with which Robinhood allowed people to trade options, which are often much riskier than stocks. Tenev conceded that Robinhood is a "for-profit business and needs to generate some revenue to pay for the costs of running this business." Under questioning from Rep. Ritchie Torres, Robinhood CEO Vlad Tenev disclosed two important stats that shed light on its underlying business model. Tax would injure Americans trying to save for retirement, '' he said claimed. 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