Drama, some humor at GameStop hearing
Lawmakers examining the recent trading frenzy
The GameStop saga took center stage Thursday when lawmakers held a congressional hearing to examine what happened during last month’s trading frenzy after the event set off a series of federal probes into possible market manipulation.
The virtual hearing, which was held by the House Financial Services Committee, was chaotic at times as lawmakers interrupted and grilled key players involved in the episode, including the chief executives of Reddit, Robinhood, electronic-trading firm Citadel Securities and hedge fund Melvin Capital.
Also attending was the investor who spearheaded the frenzy on the r/Wall-StreetBets Reddit forum, Keith Gill, known as “DeepF—ingValue.”
Last month, a band of small-time investors on Reddit helped boost GameStop shares 1,000% in just two weeks, at one point helping them touch $500 in pre-market trading. The surge caught short-selling hedge funds by surprise and was initially viewed by many small investors as a victory for the little guy over wealthy Wall Street investors.
The hearing on Thursday, which was referred to as “political theater” at some points, didn’t disappoint those looking for a bit of drama and humor.
During his testimony via video, Gill, also known as “Roaring Kitty” on YouTube, featured a poster of a kitten draped with his signature red headband that he typically wears during his live streams in the background.
“A few things I am not,” Gill, a daytrading suburban dad, said at the beginning of his address. “I am not a cat.”
His cheeky remark sounded like a reference to a Zoom filter faux pas last week, in which a lawyer at a virtual legal hearing in Texas found himself with a cat filter over his face.
Shares of GameStop briefly jumped when Gill began speaking. The stock price of the struggling videogame retailer, which were trading around $44 leading up the hearing at noon, rose above $48 following his opening remarks. Shares later slid back to below $44.
Later, Rep. Maxine Waters, D-Calif., the chairwoman of the House Financial Services Committee, grilled Robinhood CEO Vlad Tenev and Citadel CEO Kenneth Griffin. In rapid-fire questioning, Waters demanded Tenev and Griffin simply answer “yes or no.”
Waters pressed Tenev to answer whether Robinhood had liquidity problems in a tense back-and-forth.
Tenev responded they “always felt comfortable with our liquidity,” and continued to give extended answers, including that the “additional capital we raised wasn’t to meet capital requirements.” Waters interrupted a few times, pressing “please answer yes or no” and “I don’t have time, I just need a yes or no answer.” She continued to reclaim her time.
The California congresswoman used the same style of questioning with Griffin.
Waters disputed GOP Michigan Rep. Bill Huizenga, who called the hearing “political theater.”
“I appreciate all of the members who are participating today,” Waters said. “This is not political theater at all.”
Lawmakers were also looking into whether Robinhood and other brokerages that temporarily restricted trading in GameStop shares and other stocks were in compliance with federal regulations.
Robinhood’s Tenev apologized to customers for the restrictions it rolled out in late January that prevented them from buying shares in GameStop and other high-flying stocks.
“Despite the unprecedented market conditions in January, at the end of the day, what happened is unacceptable to us,” Tenev said. He added that the online brokerage is “doing everything we can to make sure this won’t happen again.”