Ebene News – United States – House GameStop Hearing dives into Robinhood, Reddit and WallStreetBets

Vlad Tenev, founder of retail stock trading app Robinhood, told a House committee on Thursday that “the financial system should be open to everyone,” including frenzied buyers by GameStop and AMC Entertainment hosted by a Reddit chat room

He apologized profusely that a fundraising rule forced the app to later block share purchases – a temporary restriction that was the focus of today’s five-hour hearing Inventories fell and some Robinhood users lost their shirts

Tenev testified before the House Financial Services Committee alongside the CEO of a hedge fund who did one murder on GameStop (Kenneth Griffin, Citadel LLC) and another who lost a lot in a short squeeze ( Gabriel Plotkin, Melvin Capital) Individual investor Keith Gill, known as Roaring Kitty from his YouTube videos and Reddit posts, bought GameStop and touted it on Reddit’s colorful WallStreetBets chat He agreed with lawmakers the stock “got a bit ahead of itself” when it hit $ 483 – from a 52-week low at $ 257 Gill, but vowed that his “posts didn’t cause the movement of billions of dollars in GameStop stocks” He made money but feels for investors who came out too late

Rounding out the witness list, Reddit CEO and co-founder Steve Huffman said that WallStreetBets “may seem sophisticated or chaotic from the outside, but the fact that we’re here today means that ‘ he succeeded in raising important questions regarding fairness and opportunities in our financial system I’m proud they are using Reddit to do this. ”He said no robot or foreign agent rushed to buy GameStop, AMC Entertainment or other stocks and saw nothing wrong with what anonymous users exchange for investment advice

The morality / financial bootstrap play was lawmakers’ first attempt to bring out the good, the bad and the ugly in a business phenomenon that rocked Wall Street that has been called a populist uprising, motivated by individual day traders, not by funds or large institutions Five related film and television projects are in the works

Committee members were there to figure out what happened, how and why and to raise questions, for example if financial markets are broken (consensus: no), if new regulation is needed (maybe ) and what type (still uncertain) The material is complex and committee chair Maxine Waters (D-CA) said today’s hearing would likely be the first of three.The SEC will also investigate the commercial frenzy when President Biden’s choice for committee chairman Gary Gensler is seated

Lawmakers have alternately praised and (mostly) criticized an unfazed, soft-spoken Tenev, who said he emigrated from economically shattered Bulgaria with his family when he was 5 and that ‘he had’ taken advantage of all that America has to offer ‘Robinhood has 15 million Elle customers and similar apps are commission-free and allow people to invest small amounts, opening up the market for younger stock pickers , more diverse and less wealthy than traditional equity investors Its users flooded the channels buying GameStop and a handful of other heavily bypassed stocks last month

But on January 28, in the midst of the whirlwind, Robinhood temporarily banned those share purchases, angering clients who said the company threw them under the bus Tenev categorically denied accusations that he was in cahoots with funds that had bypassed the stock The restrictions were necessary “to meet regulatory requirements, not to protect hedge funds,” he said. Griffin of Citadel also refused coordination Robinhood uses Citadel to process its customer transactions

Tenev said financial regulations require him to have the capital or collateral to cover transactions, which takes two days to settle (a timeframe he would like to change and regulators could look into). said the scale of what happened was impossible to predict “It was a 1 in 35 million events One that had never been seen before We had to play this to the letter in accordance with our regulatory requirements and of capital “

Robinhood raised $ 3.2 billion, cleared trading to resume and said he now has a cash cushion and better controls to make sure it doesn’t happen again. He sort of admitted for the first time once the company was in a tight spot Previously he had indicated that the increase in funds was preventative and that there was no liquidity crisis A group of lawmakers – including an incisive AOC – have hit the cabinet for, at best, having miscalculated and badly prepared

Others had greater doubts about Robinhood’s mission, which gave a real boost to the concept of “democratizing” investing

Representative Ritchie Torres (D-NY) was concerned that a free trading app like Robinhood could be as addictive as any video game Representative Cindy Axne (D-IA) called buying stocks without a bit or no information or data like gambling “Gambling on the stock market is not really a solution to inequalities People have access to it, that’s good, but if they don’t have the money to invest, it’s not really democratization “

WallStreetBets users encouraged each other to buy stocks in order to get big short GameStop and AMC hedge funds – meaning the companies had made a financial bet that stocks would drop and take a hit if they went up instead

And so, said Rep Tom Emmer (R-MN) “It was driven by people’s desire to make money I don’t see what’s wrong with it even though it’s powered by wanting to stick with a hedge fund they don’t like, “he said” We need more people to have the opportunity to develop their financial literacy To grow their wealth “

Audience focused almost entirely on GameStop AMC’s earnings were relatively more limited, but still peaked over $ 20 from a 52-week low at less than $ 2 on Thursday , GameStop and AMC closed at $ 40 69 and $ 5 51 respectively

Gill, the son of a truck driver and nurse from Brockton, MA, refuted the characterization of retail investors as know-nothing He became interested in the stock market after graduating from college in 2009 and struggling to find a job “I studied, I learned,” WallStreetBets frontrunner told lawmakers, some skeptics He thought the stock was undervalued “The market underestimated prospects of its legacy business and overestimated its risk of bankruptcy I grew up shopping at GameStop and I continue to do so “But,” The idea that I used social media to promote GameStop action to unwitting investors and influencing the market is absurd “

Huffman defended Section 230, which gives Reddit the right to manage its content and the anonymity of users. “The fact that Reddit doesn’t require people to reveal their own identities is what makes Reddit work WallStreetBets wouldn’t work [otherwise] because people reveal their financial situation to win and loss “

Less than a month after the story exploded, Deadline revealed that Netflix was in talks to make a movie about it that Mark Boal is in negotiations to write and Noah Centineo to be tied up to play a role. Major The Streamer Doubles on GameStop with New Documentary Series from Emmy and Oscar-winning Filmmakers Dan Cogan and Liz Garbus In addition, MGM has acquired the rights to Ben Mezrich’s book proposal, The Antisocial Network; Jamie Rogozinski, the founder of WallStreetBets, allegedly sold his life story to RatPac Entertainment; and XTR, the company behind You Cannot Kill David Arquette and Bloody Nose, Empty Pockets, has teamed up with directors Chris Temple and Zach Ingrasci on a feature documentary

He said it! by wallstreetbets

Vlad Tenev, Roaring Kitty

Ebene News – United States – House GameStop Hearing dives into Robinhood, Reddit and WallStreetBets

Source: https://deadline.com/2021/02/robinhood-congressional-hearing-vlad-tenev-reddit-wallstreet-bets-testimony-1234696421/