- The US Congress questioned Vlad Tenev and others about the January market volatility.
- Tenev to disclose if Robinhood actions were in the best interest of its clients.
- However, Keith Gill did not come under fire although he made millions from the incident.
Robinhood CEO Vlad Tenev once again found himself in the hot seat, this time at a Congress hearing. The hearing aims to address the financial market volatility that occurred in January.
Congress held the recent hearing before the House Financial Services Committee where Tenev seemed to receive the most interest.
Committee Chair Maxine Waters even titled the hearing,
Game Stopped? Who wins when Short Sellers, Social Media, and Retail Investors Collide.
Waters in particular took both Tenev and Citadel CEO Kenneth Griffin to task. Using rapid-fire questions Waters asked both Tenev and Griffin to only answer yes or no, a request neither executive was able to follow.
Of note, Tenev failed to clarify if his clients should be worried about liquidity. In the past Tenev claimed that liquidity problems were the reason the trading app stopped trades in January.
The trading app and Citadel’s relationship also came under scrutiny. Tenev claimed that the app does not answer to hedge funds and aims to serve its clients only. However, the link between Robinhood and Citadel seems to suggest otherwise.
Citadel stepped in to save Melvin Capital after the hedge fund lost about 50% of its funds due to short selling Gamestop and other stocks.
On the other hand, Robinhood was charged in relation to Citadel by the SEC late last year. The SEC claimed that the app didn’t tell clients that it sent Citadel and other market makers their data.
In fact, neither Tenev nor Griffin could confirm if their relationship was in the best interest of Robinhood clients.
However, in a rare moment of unity, both sides of the House agreed that retail investors have a right to trade. This explains why Reddit CEO Steven Huffman and Keith Gill did not come under fire.
Gill is the man who started it all when he posted an analysis of GameStop on Reddit. Gill claims that his GameStop trade made him millions.