Robinhood boss says GameStop episode unacceptable
Vlad Tenev said "unacceptable to us" was the situation the company faced in January - when financial pressures forced it to curtail some stock purchases. "We are doing everything we can to make sure this won't happen again," he said.
At a US congressional hearing sparked by last month's GameStop trading frenzy, the president of the Robinhood trading site apologised to consumers. Vlad Tenev said "unacceptable to us" was the situation the company faced in January - when financial pressures forced it to curtail some stock purchases. "We are doing everything we can to make sure this won't happen again," he said. "Many Americans feel that the system is stacked against them and no matter what, Wall Street always wins," said Congresswoman Maxine Waters, who lead the House Financial Services Committee hosting the hearing. Lawmakers said the move, which caused outrage, had raised concerns about fairness in financial markets.
Mr. Tenev said that because of the rise in trading, the company, which is common among everyday investors, was forced to temporarily restrict trades in GameStop and some other companies because of new financial requirements it faced. He said the organisation moved rapidly to raise new capital, allowing it to prevent similar changes in the future. He also denied that Robinhood had behaved at anyone else's behest. He said, "I'm sorry for what happened. I apologise," "I'm not going to say that Robinhood did everything perfectly, and that we haven't made mistakes in the past, but what I commit to is that we improve from this." Other key players called to testify at the hearing have denied wrongdoing in the case, which saw the price of GameStop shares rise from less than $20 in early January to more than $350 in a matter of weeks.
The amazing rise, apparently fuelled by a swarm of independent traders trading tips on social media sites such as Reddit, has prompted probes investigating the possibility of branding Robinhood's ties to Citadel Securities, a Wall Street company, have faced particular scrutiny. Robinhood collects payments from Citadel, which pays for the execution of client orders from Robinhood. Citadel also invested in Melvin Capital last month, one of the hedge funds hit by losses after betting that shares in GameStop will fall. The head of Citadel Securities, Kenneth Griffin, said that no one in his company had any talks with Robinhood about limiting GameStop trades or other so-called "meme stocks" "I first learned of Robinhood's trading restrictions after they were announced," he said. At the often combative hearing, which saw lawmakers raise possible regulatory changes, such as requirements that companies report when they have made big bets against a stock, Mr Griffin and Mr Tenev attracted much of the focus.
