Lawmakers to meet with GameStop’s key players
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 massive short-selling 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 on Thursday.
The players include a swaggering 34-year-old YouTube personality and GameStop evangelist; one of the richest and most prominent investment tycoons; and the CEO 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.
As they question Tenev and other witnesses, Lawmakers and regulators will look for answers about what the GameStop trading frenzy says about the fault lines and potential conflicts in the structure of the market that can hurt unsophisticated
investors.
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.
Expected to testify remotely at Thursday’s hearing are:
•Tenev, an early-thirties entrepreneur who started Robinhood in 2013 with a fellow Stanford University math student. Claiming 13
million users, the mobile app’s popularity has grown, fueled by a simplified trading format and first-stockfor-free inducement appealing to millennials. The Silicon Valley company is said to be looking to go public this year; the GameStop debacle has brought unwanted attention.
• 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.
• Gill, AKA Roaring Kitty. The most visible protagonist and GameStop booster on the WallStreetBets subreddit with his R-rated energy, bright red headband and colorful T-shirts. The 34-yearold operating out of the basement of his home in a Boston suburb drew legions of investors into his orbit as they joined his livestream chats on YouTube.
• Steve Huffman, Reddit CEO and co-founder. A major force in social media, Reddit claims some 430 million “Redditors” worldwide. Its WallStreetBets forum is at the center of the drama.