{"id":107357,"date":"2021-02-18T11:23:52","date_gmt":"2021-02-18T11:23:52","guid":{"rendered":"https:\/\/fin2me.com\/?p=107357"},"modified":"2021-02-18T11:23:52","modified_gmt":"2021-02-18T11:23:52","slug":"hedge-funds-robinhood-face-grilling-by-congress-over-gamestop-reddit-rally","status":"publish","type":"post","link":"https:\/\/fin2me.com\/markets\/hedge-funds-robinhood-face-grilling-by-congress-over-gamestop-reddit-rally\/","title":{"rendered":"Hedge funds, Robinhood face grilling by Congress over GameStop Reddit rally"},"content":{"rendered":"

WASHINGTON (Reuters) – Wall Street hedge fund managers, the chief executives of Robinhood and Reddit, and a YouTube streamer known as Roaring Kitty face a grilling on Thursday afternoon from U.S. lawmakers over the Reddit rally in shares of GameStop Corp.<\/p>

FILE PHOTO: GameStop logo is seen in front of displayed Reddit logo in this illustration taken February 2, 2021. REUTERS\/Dado Ruvic\/Illustration\/File Photo\/File Photo<\/figcaption>

Some of Wall Street\u2019s most powerful players, including billionaire Republican mega-donor and Citadel CEO Ken Griffin, will make rare public statements about their business practices during the Congressional hearing on how Reddit users trading on retail platforms banded together to squeeze hedge funds that had bet against shares of the video game retailer and other companies.<\/p>\n

Griffin will appear before the Democratic-led House finance panel alongside Robinhood CEO Vlad\u202f Tenev, Melvin Capital CEO Gabriel \u202fPlotkin, Reddit CEO Steve Huffman, and Keith Gill, a Reddit user and YouTube streamer known as Roaring Kitty who promoted his investment in GameStop.<\/p>\n

The five men have been at the center of the saga that roiled Wall Street in January prompting probes by several federal and state agencies.<\/p>\n

With Wall Street critic Representative Maxine Waters at the helm and Alexandria Ocasio-Cortez and other progressives on the 54-member panel, the hearing promises to be firey, with tough questions for Tenev, Griffin and \u202fPlotkin in particular.<\/p>\n

\u201cOnce or twice a year a hearing lends itself to good theater…Thursday\u2019s hearing is one of those rarities,\u201d wrote Ian Katz at Alpha Partners in Washington, adding the hedge fund moguls are likely to be top targets for Democrats.<\/p>\n

A spokesman for Waters declined to comment ahead of the hearing. In prepared testimony published on Wednesday, the witnesses generally acknowledged the GameStop saga was unprecedented, but they all said there was no foul play on their part.<\/p>\n

The Reddit rally drove massive volatility in GameStop and other shares, prompting the post-trade \u201cclearing\u201d houses that guarantee trades to call for billions of dollars in extra collateral from Robinhood and other retail trading platforms.<\/p>\n

In response, many suspended buying in the affected stocks on Jan. 28. Lawmakers from both parties were outraged and questioned if the trading platforms were siding with the hedge funds over Mom and Pop investors.<\/p>\n

New York-based Melvin Capital, one of several hedge funds that had bet GameStop\u2019s shares would tumble, suffered massive losses as the stock soared leading up to Jan. 28. Citadel made a $2 billion investment in Melvin on Jan. 25. [L1N2KM064]<\/p>\n

Lawmakers will likely focus on whether Robinhood made it too easy for small investors to take risks, said analysts. Its commercial arrangements with market makers to which it routes orders may also be a hot topic, they said, as well as whether that \u201cpayment for order flow\u201d model may disadvantage customers.<\/p>\n

Robinhood says few of its customers engage in risky trades, while \u201cpayment for order flow\u201d often helps customers get better prices than trading on a stock exchange.<\/p>\n

Tenev, Griffin and Plotkin are likely to be grilled on short selling, and whether Robinhood\u2019s decision to suspend buying in the affected stocks was influenced by Citadel or Griffin, who majority-owns Citadel Securities, a Robinhood market maker.<\/p>\n

All parties have denied any attempt by Citadel or Citadel Securities to influence Robinhood\u2019s policies.<\/p>\n

Yet legislative action is unlikely once the fireworks dissipate, said Isaac Boltansky, director of policy research at Washington-based Compass Point Research & Trading.<\/p>\n

\u201cWe doubt that Washington can advance an acute policy prescription when broader concerns regarding equity market structure and economic equality complicate the conversation.\u201d<\/p>\n

Source: Read Full Article<\/a><\/p>\n","protected":false},"excerpt":{"rendered":"

WASHINGTON (Reuters) – Wall Street hedge fund managers, the chief executives of Robinhood and Reddit, and a YouTube streamer known as Roaring Kitty face a […]<\/p>\n","protected":false},"author":3,"featured_media":107356,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[1],"tags":[],"yoast_head":"\nHedge funds, Robinhood face grilling by Congress over GameStop Reddit rally - Fin2me<\/title>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" href=\"https:\/\/fin2me.com\/markets\/hedge-funds-robinhood-face-grilling-by-congress-over-gamestop-reddit-rally\/\" \/>\n<meta property=\"og:locale\" content=\"en_US\" \/>\n<meta property=\"og:type\" content=\"article\" \/>\n<meta property=\"og:title\" content=\"Hedge funds, Robinhood face grilling by Congress over GameStop Reddit rally - Fin2me\" \/>\n<meta property=\"og:description\" content=\"WASHINGTON (Reuters) – Wall Street hedge fund managers, the chief executives of Robinhood and Reddit, and a YouTube streamer known as Roaring Kitty face a [...]\" \/>\n<meta property=\"og:url\" content=\"https:\/\/fin2me.com\/markets\/hedge-funds-robinhood-face-grilling-by-congress-over-gamestop-reddit-rally\/\" \/>\n<meta property=\"og:site_name\" content=\"Fin2me\" \/>\n<meta property=\"article:published_time\" content=\"2021-02-18T11:23:52+00:00\" \/>\n<meta name=\"author\" content=\"Mark\" \/>\n<meta name=\"twitter:card\" content=\"summary_large_image\" \/>\n<meta name=\"twitter:image\" content=\"https:\/\/fin2me.com\/wp-content\/uploads\/2021\/02\/cnewsfotor8-8.jpg\" \/>\n<meta name=\"twitter:label1\" content=\"Written by\" \/>\n\t<meta name=\"twitter:data1\" content=\"Mark\" \/>\n\t<meta name=\"twitter:label2\" content=\"Est. reading time\" \/>\n\t<meta name=\"twitter:data2\" content=\"3 minutes\" \/>\n<script type=\"application\/ld+json\" class=\"yoast-schema-graph\">{\"@context\":\"https:\/\/schema.org\",\"@graph\":[{\"@type\":\"WebPage\",\"@id\":\"https:\/\/fin2me.com\/markets\/hedge-funds-robinhood-face-grilling-by-congress-over-gamestop-reddit-rally\/\",\"url\":\"https:\/\/fin2me.com\/markets\/hedge-funds-robinhood-face-grilling-by-congress-over-gamestop-reddit-rally\/\",\"name\":\"Hedge funds, Robinhood face grilling by Congress over GameStop Reddit rally - 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