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Gamers in GameStop market drama make their case to lawmakers | The Specific Tribune

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Wall Road hedge fund managers, the chief executives of Robinhood and Reddit, and a YouTube streamer often known as Roaring Kitty on Wednesday defended their roles in GameStop’s Reddit-fueled inventory rally earlier than they face a grilling by lawmakers.

They insisted that whereas the market turmoil across the inventory was unprecedented, there was no foul play, in response to official testimony revealed by the Home Monetary Companies Committee a day earlier than a scheduled listening to.

Final month’s Reddit rally drove large volatility in GameStop and different shares, prompting the post-trade clearinghouses that assure trades to name for billions of {dollars} in collateral from Robinhood and different retail buying and selling platforms.

‘GameStop impact’ may ripple additional as Wall Road eyes brief squeeze candidates

In response, many suspended shopping for within the affected shares on January 28. This outraged lawmakers, who questioned if the buying and selling platforms have been siding with hedge funds that had wager in opposition to the shares over Mother and Pop buyers.

Vladimir Tenev, CEO of on-line brokerage Robinhood, wrote in his testimony that the choice to halt shopping for was solely because of the want to satisfy regulatory capital necessities.

Gabriel Plotkin stated he was “humbled” when his hedge fund Melvin Capital Administration suffered important losses on the brief finish of the commerce, however insisted his agency didn’t push Robinhood to droop buying and selling.

Likewise, Ken Griffin, CEO of hedge fund Citadel LLC and majority proprietor of Citadel Securities, a market maker that handles most of Robinhood’s buyer orders, disputed hypothesis that his agency tried to affect Robinhood’s determination.

“I want to be perfectly clear: We had no role in Robinhood’s decision to limit trading in GameStop or any other of the ‘meme’ stocks. I first learned of Robinhood’s trading restrictions only after they were publicly announced,” he wrote.

Keith Gill, who touted his GameStop funding for months on his Roaring Kitty YouTube channel and Reddit, insisted his place was solely primarily based on publicly recognized fundamentals of the enterprise and it was “preposterous” to recommend he sought to entice unwitting buyers to purchase shares.

Reddit CEO Steve Huffman stated the corporate had analysed visitors on the Reddit sub-feed WallStreetBets the place customers congregate to debate shares. The corporate discovered no bots, international brokers, or unhealthy actors performed a major position in visitors that helped drive curiosity in GameStop.

“WallStreetBets is first and foremost a real community,” he stated.

Robinhood lifts buying and selling restrictions on all shares, together with GameStop

On Thursday, the Home committee will hear from the 5 males, in addition to from Jennifer Schulp, director of monetary regulation research on the Cato Institute.

Lawmakers have directed most of their ire at Robinhood, however Tenev insisted his firm had little alternative however to droop shopping for. He supplied in depth element on calls for from clearinghouses for the agency to place up billions of {dollars} in extra collateral to satisfy regulatory necessities.

He additionally dismissed the concept Robinhood acted on the behest of any hedge funds, calling such hypothesis “absolutely false and market-distorting rhetoric,” whereas noting its buyer settlement and securities guidelines give it the discretion to freeze buying and selling.

Griffin used the chance to level to flaws within the post-trade infrastructure, noting that sooner settlement instances and “transparent clearinghouse capital requirements,” may assist scale back dangers to brokers like Robinhood and its clients.

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