Robinhood CEO Vlad Tenev is expected to testify before the House Financial Services Committee on Feb. 18 as lawmakers probe the company's decision-making to restrict customers from trading GameStop (GME) shares last week, sources told Politico.
The hearing was later confirmed by a press release from the committee describing the virtual hearing will be entitled: "Game Stopped? Who Wins and Loses When Short Sellers, Social Media, and Retail Investors Collide." The hearing is scheduled for Feb. 18 at 12:00 PM ET.
Robinhood's decision to restrict customers from buying stocks, along with forced liquidations, drew immense criticism from both major parties, including Rep. Alexandria Ocasio-Cortez and Sen. Ted Cruz.
House Financial Services Chair Maxine Waters wants to investigate the possible role hedge funds had in influencing Robinhood to restrict trading on GME after the video game retailer soared 1,500% in a matter of weeks, pulling off the "mother of all short squeezes." During the squeeze, multiple hedge funds, including Melvin Capital, were blown up.
"I am concerned about whether or not Robinhood restricted the trading because there was collusion between Robinhood and some of the hedge funds that were involved with this," Waters told MSNBC this weekend.
Rep. Al Green, who chairs the Financial Services Oversight Subcommittee, wants more information on the role if any, Citadel had in influencing Robinhood to act.
Green said Monday he wants to know "whether or not there was something about this relationship that caused Robinhood to act, or did Robinhood act because of reasons associated with its liquidity."
Meanwhile, Robinhood raised billion of dollars over the last few days to fund capital shortfalls due to catastrophic risk management and disastrous back-office operations. In an open letter to customers, the company covered up its capital deficiencies by telling everyone the new capital is "to invest in record customer growth"...
Robinhood reiterated that it "limited buying in volatile securities to ensure it complied with deposit regulations," according to the open letter. Or rather was it because the Depository Trust & Clearing Corporation jacked-up deposit requirements ten-fold?
While Robinhood and r/WallStreetBets traders trigger marketwide short covers, especially with today's monster silver squeeze, regulators, including the U.S. Commodity Futures Trading Commission (CFTC) is "closely monitoring" silver markets, according to Reuters.
Silver prices jumped to eight-year highs as retail traders piled into silver stocks and ETFs, along with some grabbing physical silver, resulting in a massive premium for physical at popular bullion websites.
The CFTC "is communicating with fellow regulators, the exchanges, and stakeholders to address any potential threats to the integrity of the derivatives markets for silver, and remains vigilant in surveilling these markets for fraud and manipulation," acting chairman Rostin Behnam said in a statement.
To sum up, markets are broken; they've been broken for the last decade. Thank the Federal Reserve for that. Let's hope lawmakers ask the right questions on Feb. 18 and don't give Wall Street a free pass.