As traders in late January That wagered video game retailer will fail. GameStop shares jumped more and more briefly , And . Market volatility gained momentum .
On Thursday, the Household Committee on Financial Services holds a virtual hearing called Game Stopped? Who wins when the short seller wins social media and retail investors. The chief executives of Reddit, Robinhood, Citadel and Melvin Capital will be in attendance, along with the Reddit poster, which created a frenzy to buy Gamesmops and is now.
Here’s how Congress got involved on the hearing and some background.
When is the hearing?
The House Committee on Financial Services will hold a hearing on Thursday, February 18 at 9 am PT / 12 pm ET.
Where can I see the hearing?
CNET will stream the hearing on our YouTube channel.
The livestream will be available on the YouTube Committee of the Financial Services House. C-SPAN will also conduct hearings.
Why does hearing happen?
During the week of 25 January,His share prices saw a sudden and dramatic increase. Taking credit was a group of merchants on Saberdit R / Walvetbet. Those who bought video game retailer shares early saw huge returns.
On January 28, the popular trading app Robinhood said it would, Although this allowed the shares to trade again the next day. The move created a sharp deadlock from customers and MPs.
Several members of Congress, including Rep. Alexandria Ocasio-Cortez, Rep. Rashida Talib and Sen. Ted Cruz, called for a hearing on Robinhood’s actions. On February 3, Rep. Maxine Waters, a Democrat from California and chairman of the House Committee on Financial Services, Cheddar There will be a hearing to investigate what happened.
Waters said in a Jan. 28 statement, “showing that predatory and manipulative conduct is the responsibility of lawmakers and securities regulators, who are accused of protecting investors and making our capital markets fair, orderly and efficient.” ” “As a first step to resume these abusive practices, I will hold a hearing to investigate recent activity around GameStop stocks and other affected stocks, including short selling, online trading platforms, gamification and their capital Will focus on their systemic impact on markets. Retail investors
Who is going to the hearing?
The witness list includes the CEOs of companies that handled the trades as well as the Reddit trader who led the charge in the shopping spree at Gamestop.
Keith Gill is a poster on the Stock Trading Subredit r / WallStreetBets and runs the Roaring Kitty YouTube channel. Back in September 2019, he began posting monthly GME YOLO updates, indicating his certainty that Gametop stock was undervalued. He was seen as a hero on Subredit for starting a shopping spree for Gamestop, but his post and video caught the attention of both the House committee and regulators. According to the Boston Globe, Massachusetts regulators sent Gill a subpoena on February 8 to answer questions about his business activity. Gill is also.
In a written testimony on Wednesday, he said, “I did not urge anyone to buy or sell the stock for my benefit.” “I did not belong to any group trying to make movements in the stock price. I never had any financial relationships with any hedge fund. I had no idea about Gametop except what was public. . I did not know anyone inside the company, and I never spoke to any insider. “
Steve Huffman is the co-founder and CEO of Reddit. The R / WallStreetBets subreddit was the headquarters for all “mem” stock trading and grew in size to over nine million customers.
Vlad Tenev is the CEO of Robinhood, a popular investment app used by many who participate in the buying frenzy. On January 28, his company tweeted that it would not allow any user. This triggered a backlash and questions arose as to why this happened. Tenev did several interviews during the following days, but it wasn’t until he spoke with Tesla CEO Elon Musk on the voice chat app Clubhouse that he explained what happened. Tenev said that regulators informed his company that it would need $ 3 billion as collateral for trades. Since it had no money, the investment application had to hold off on the purchase of shares until it had acquired more money to allow limited trading on 29 January.
Kenneth Griffin and Gabriel Plotkin are CEOs of hedge fund companies Citadel and Melvin Capital, respectively. In this event, Melvin Capital r / WallStreetBets merchants would be considered opposing. The hedge fund expected Gametop’s share price to continue to decline, so it began a short sale, which is essentially a condition that the stock will be at a lower price in the future. Melvin lost 53% of its investment in January, which translates into billions of dollars, due to an increase in the value of the stock price of the video game retailer of Reddit Merchants. In a written testimony, Plotkin said that his company “played absolutely no role” in the decision made by Robinhood and other trading platforms to suspend trading Gametop stock and that Melvin Capital had taken a position a few days earlier in the retailer’s shares Was closed.
The stronghold is an investor in Melvin Capital and helped pull it out after a major loss last month, though Plotkin says it was not a bailout in his written testimony. Robinhood also has ties to the stronghold. When app users purchase shares of a company, Citadel pays Robinhood to fulfill these orders, known as the Payment Order of Flows, or PFOF. This allows Robinhood to trade stock to users without paying any fees. There are some questions as to whether this relationship was the reason for the trading halt on January 28, although the hedge fund denied it.