Connect with us


US lawmakers focus their anger on Robinhood in GameStop recriminations




Less than a minute after Vlad Tenev’s opening speech, Maxine Waters was already impatient with Robinhood’s CEO and hammering the hammer.

“I would like you to use your limited time to speak directly about what happened on January 28 and your involvement in it,” said the veteran California Democrat who chairs the House financial services committee.

The unusual hiatus was the first sign that Tenev would be the main target for many MPs, especially Democrats, during video game retailer GameStop’s first trade hearing last January, which inflicted heavy losses on funds. speculative and caused reverberations around the world. American stock market.

Over the course of the afternoon, lawmakers quizzed Tenev about his online trading platform’s business model, culture, and ties to some of Wall Street’s biggest players, suggesting they were running into his mission. declared to democratize finance and repeatedly force the 34-year-old former leader of Bulgarian origin on the defensive.

“Robinhood has embarked on a history of breakdowns, design failures and, more recently, what appears to be a failure to properly account for your own internal risk,” said Alexandria Ocasio-Cortez, the Liberal MP. from New York which was one of the first reviews of Robinhood’s decision to stop trading on GameStop.

Representatives chose Robinhood and how it became the center of the storm in January. Tenev eventually admitted that the company did not have enough cash to meet a call for funds from its clearinghouse, which appears to contradict an earlier statement to Waters that Robinhood had “always felt comfortable” with its cash.

“At that point, we would not have been able to post the $ 3 billion in collateral,” Tenev told lawmakers on Thursday.

Drawn by Anthony Gonzalez, Republican Representative for Ohio, Tenev agreed it would have been a “total disaster” if Robinhood had failed to meet the call for capital and faced liquidation of its positions. clients.

“In a way, I like your business because it offers, when properly managed, investment opportunities for people who are currently excluded from the markets,” Gonzalez said. But he added that “a vulnerability was clearly exposed in your business model and possibly in the regime that governs your cap requirements.”

Robinhood has become one of the must-have trading platforms for Americans new to the financial markets. Its boom has taken the brokerage industry by storm. Founded less than ten years ago, it now has more than 13 million customers. But Robinhood’s decision to restrict trade with its clients in January to help protect its own business has proven to be a catalyst for a wider downsizing of the company.

Cindy Axne of Iowa lambasted the investment ‘gamification’ promoted by Robinhood, saying that ‘everyone seemed to be involved’ as shares started to rise on GameStop and the AMC movie channel last month . “This includes people like my nephew and his two friends who stayed up until four in the morning to see if they could get a share of this action.”

Axne continued, “When people sign up they get a scratch ticket to see what they get, confetti drops every time they place an order, they get push notifications. . . Why did you add specific game design elements to look like gambling in your app? “

But it was Carolyn Maloney, another member of Congress from New York, who asked Tenev to apologize, telling him that Robinhood felt she had “the right to make the rules as they go.” “I’m sorry for what happened. I apologize, ”Tenev replied.

Vlad Tenev, managing director of Robinhood, was at the center of most checks during Thursday’s hearing © House Financial Services Committee Alexandria Ocasio-Cortez: “ If the removal of income you make from the payment for the flow of orders would lead to the elimination of free commissions, does not mean that trading on Robinhood is not really free ‘© Bloomberg

Tenev also apologized to the family of Alex Kearns – the 20-year-old man who committed suicide last summer after believing he had lost more than $ 750,000 in trading options on the platform. form – after Emanuel Cleaver of Missouri pressured Robinhood’s general manager on the tragedy. .

“The passing of Mr. Kearns has been deeply troubling to me and to the entire company,” Tenev said. He added that Robinhood had made many changes to the platform in the wake of Kearns’ death, including tightening restrictions on riskier transactions and adding live support for customers over the phone for “acute” option cases.

Robinhood’s relationship with Citadel Securities, the market maker founded by Ken Griffin, who is also the CEO of the hedge fund Citadel, has also come under close scrutiny. Tenev has repeatedly denied being pressured by hedge funds to limit trading in GameStop shares, quashing a rumor that proliferated after Griffin’s hedge fund invested $ 2 billion in Melvin Capital, the evil group. taken by retail traders.

Melvin founder Gabe Plotkin said he was “humbled” after losing billions of dollars on his bet against GameStop and predicted that the hedge fund industry would have to adjust to the rise of retail investors.

“I don’t think you’re going to see stocks with the kinds of short interest levels we’ve seen before this year,” he said. “I don’t think investors like me want to be sensitive to this kind of dynamic.”

As expected, one of the big topics was payment for order flow – the practice of market makers paying brokers to route transactions to them. Several regulators asked participants if this creates a conflict of interest. Ocasio-Cortez asked Tenev if he would be willing to pass the product on to Robinhood customers, a question he tried to avoid by saying that paying for the order flow allows him to provide free exchanges.

“While removing the income you make from payment from the order flow would lead to the removal of free commissions, that doesn’t mean trading on Robinhood isn’t actually free,” Ocasio-Cortez replied.

Brad Sherman, a senior committee member, had another heated, albeit with Griffin, exchange over the controversial practice. Sherman has repeatedly insisted on Griffin whether paying Robinhood to route trades to Citadel Securities really means Robinhood’s clients get the best execution, or whether Citadel favors orders it doesn’t pay. .

Griffin attempted to look to other factors that play a role in the quality of execution, such as order size. After several rounds of back and forth, Sherman told Griffin, “You are doing a great job of wasting my time. If you want to filibuster, you should go to the Senate.

The least toasted was Steve Huffman, CEO and co-founder of Reddit, who spoke only occasionally, largely to praise the behavior of day traders on the social media site’s WallStreetBets forum, lining up with users. “The fact that we are here today means that they have succeeded in raising important questions regarding fairness and opportunities in our financial system,” he said in his opening speech.

He later argued that the forward-thinking platform’s user-oriented content moderation system naturally eliminates misinformation while making the most compelling posts appear, meaning that investment advice on the platform- form were “probably among the best”.


He also tried to ignore complaints from Plotkin of Melvin Capital, who said he had been the target of anti-Semitism and racism on the platform. Huffman said the Reddit “anti-evil” team – of content moderators who monitor the site for harassment and other rule-breaking speech – had searched “high and low” for such activity, but found only only one comment she had withdrawn.

While Tenev was the focus of most of the review, it was Keith Gill, the retail trader known as “Roaring Kitty,” who came up with an air of justification and a touch of comedy.

After declaring himself “extremely lucky” that GameStop shares rise which he helped drive at the expense of some of Wall Street’s biggest short sellers, he said he wanted to clear some things up to virtually assembled lawmakers. .

“I am not a cat. I am not an institutional investor, nor a hedge fund, ”he said. “I’m just an individual whose investment in GameStop and social media posts is based on my own research and analysis.” Gill concluded her statement with her signature: “I love the stock.”

By James Politi in Washington, Eric Platt, Ortenca Aliaj, Colby Smith and Aziza Kasumov in New York and Hannah Murphy and Miles Kruppa in San Francisco

What Are The Main Benefits Of Comparing Car Insurance Quotes Online

LOS ANGELES, CA / ACCESSWIRE / June 24, 2020, / Compare-autoinsurance.Org has launched a new blog post that presents the main benefits of comparing multiple car insurance quotes. For more info and free online quotes, please visit https://compare-autoinsurance.Org/the-advantages-of-comparing-prices-with-car-insurance-quotes-online/ The modern society has numerous technological advantages. One important advantage is the speed at which information is sent and received. With the help of the internet, the shopping habits of many persons have drastically changed. The car insurance industry hasn't remained untouched by these changes. On the internet, drivers can compare insurance prices and find out which sellers have the best offers. View photos The advantages of comparing online car insurance quotes are the following: Online quotes can be obtained from anywhere and at any time. Unlike physical insurance agencies, websites don't have a specific schedule and they are available at any time. Drivers that have busy working schedules, can compare quotes from anywhere and at any time, even at midnight. Multiple choices. Almost all insurance providers, no matter if they are well-known brands or just local insurers, have an online presence. Online quotes will allow policyholders the chance to discover multiple insurance companies and check their prices. Drivers are no longer required to get quotes from just a few known insurance companies. Also, local and regional insurers can provide lower insurance rates for the same services. Accurate insurance estimates. Online quotes can only be accurate if the customers provide accurate and real info about their car models and driving history. Lying about past driving incidents can make the price estimates to be lower, but when dealing with an insurance company lying to them is useless. Usually, insurance companies will do research about a potential customer before granting him coverage. Online quotes can be sorted easily. Although drivers are recommended to not choose a policy just based on its price, drivers can easily sort quotes by insurance price. Using brokerage websites will allow drivers to get quotes from multiple insurers, thus making the comparison faster and easier. For additional info, money-saving tips, and free car insurance quotes, visit https://compare-autoinsurance.Org/ Compare-autoinsurance.Org is an online provider of life, home, health, and auto insurance quotes. This website is unique because it does not simply stick to one kind of insurance provider, but brings the clients the best deals from many different online insurance carriers. In this way, clients have access to offers from multiple carriers all in one place: this website. On this site, customers have access to quotes for insurance plans from various agencies, such as local or nationwide agencies, brand names insurance companies, etc. "Online quotes can easily help drivers obtain better car insurance deals. All they have to do is to complete an online form with accurate and real info, then compare prices", said Russell Rabichev, Marketing Director of Internet Marketing Company. CONTACT: Company Name: Internet Marketing CompanyPerson for contact Name: Gurgu CPhone Number: (818) 359-3898Email: [email protected]: https://compare-autoinsurance.Org/ SOURCE: Compare-autoinsurance.Org View source version on accesswire.Com:https://www.Accesswire.Com/595055/What-Are-The-Main-Benefits-Of-Comparing-Car-Insurance-Quotes-Online View photos

picture credit


to request, modification Contact us at Here or [email protected]