Players in GameStop saga head to House panel hearing today
WASHINGTON — The GameStop saga has been portrayed as a victory of the little guy over Wall Street giants, but not everyone agrees, including some lawmakers in Washington.
GameStop shares soared 1,600% in January before falling back to earth. Entangled in the drama are huge shortselling hedge funds, a social media message board and ordinary investors wanting in on the hottest new trade, among others. The House Financial Services Committee is ready to dig into the confounding episode at a hearing today.
The players include a swaggering 34-year-old YouTube personality and GameStop evangelist; one of the richest and most prominent investment tycoons; and the chief executive officer of the online platform Robinhood that hosted a tsunami of speculative GameStop trading but faced intense criticism for restricting trading at the height of the frenzy.
The CEO, Vlad Tenev, is denying speculation from some lawmakers that Robinhood acted to favor its big Wall Street clients when it blocked customers on Jan. 28 from buying shares of GameStop and a dozen other companies. The restrictions lasted in some form for days.
The accusation is that Robinhood changed the rules of the road midway through to favor big clients that stood to lose money if GameStop shares kept rising.
“Any allegation that Robinhood acted to help hedge funds or other special interests to the detriment of our customers is absolutely false and market-distorting rhetoric,” Tenev says in written testimony prepared for the hearing. “Our customers are our top priority.”
Tenev reiterated Robinhood’s position that it imposed the trading restrictions solely to meet capital requirements set by regulators.
Tenev is certain to be asked whether Robinhood’s abrupt freeze on individual users buying GameStop shares was done at the behest of Wall Street titan Citadel — its biggest trading partner — or other major firms.
The online GameStop booster, Keith Gill, who goes by Roaring Kitty, plans to tell the lawmakers that he reaped a profit on his investment because he did his homework on the company, and not because he touted the stock to “unwitting investors,” according to prepared remarks.
Also expected to testify is Ken Griffin, Citadel CEO. One of the wealthiest hedge fund managers in an industry full of multi-billionaires that commands trillions in assets and is known by its penchant for risk and prolific use of short-selling, in which the funds essentially bet a stock’s price will drop. Griffin is politically plugged in and has been a heavy donor to Republican politicians.