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Government The Courts United States

Robinhood CEO To Testify Before Maxine Waters' Panel On GameStop (politico.com) 79

Posted by BeauHD from the mark-your-calendar dept.
The CEO of online stock brokerage Robinhood is expected to testify before a House committee on Feb. 18 as lawmakers dig into the firm's role in the tumultuous trading of GameStop stock and other companies, people familiar with the matter said. Politico reports: The hearing before the House Financial Services Committee with Robinhood CEO Vlad Tenev, which has not been formally announced, is primed to be a blockbuster. Share prices of GameStop and other struggling companies skyrocketed last week in part thanks to traders on the social media website Reddit targeting Wall Street hedge funds, which were betting heavily that the stock price would fall. Some of the investors betting against the companies subsequently suffered huge losses.
[...]
"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 said on MSNBC this weekend. It was not clear if Democrats would ask other financial institutions to testify. Democratic lawmakers are also examining the role of firms owned by billionaire Ken Griffin. The two companies -- the hedge fund Citadel and trading firm Citadel Securities -- denied responsibility for any broker's decision to suspend trading. Citadel bailed out a hedge fund that suffered from GameStop's stock increase and Citadel Securities pays Robinhood to execute its stock trades.
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Robinhood CEO To Testify Before Maxine Waters' Panel On GameStop More

Robinhood CEO To Testify Before Maxine Waters' Panel On GameStop

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  • ... would they be asked to testify about how they contributed to a stock collapse?

  • This is a massive waste of time (Score:3, Insightful)

    by Anonymous Coward on Monday February 01, 2021 @10:44PM (#61017776)

    This will be nothing but a grandstanding bitchfest to show the 'little people' that the government 'cares'.

    If they really want to make some changes, start by hauling in all those imbeciles in congress that regularly profit from insider trading information. One of the most recent examples: Nancy Pelosi's husband [yahoo.com] invested $1million in Tesla calls last December, and wouldn't you know it, the US government just announced a move to an all-electric fleet. Last year, you had the former Republican Senators from Georgia (David Perdue and Kelly Loeffler) pulling similar stunts thanks to insider knowledge, and nothing came of it.

    Maxine Waters is a barely-literate half-senile dunce, so nothing will be done. This is the chairperson [youtube.com] of the House Committee on Financial Services? I'll leave it to someone else to paste the Picard facepalm ascii.

    • Re: (Score:2)

      by 0dugo0 ( 735093 )

      Can't wait till he has to slap her in the face with her own Dodd-Frank act

    • Congress doesn't have a say about the executive branch issuing an executive order.

      Anybody paying even the slightest attention could have told you Biden would have pushed for electric vehicle rollouts across the Federal fleets. And as a luxury manufacturer, Tesla will see little if any of that.

      If you are going to complain about politicians trading on insider knowledge, at least pick ones far more obvious. Like the ones about to get massive fines against them until Trump pardoned them. Or the Texas AG with em

      • Re: (Score:1)

        by Anonymous Coward

        > Congress doesn't have a say about the executive branch issuing an executive order.

        Except, you know, having access to talk to the President via both position and political connection. SMH

    • Where do you see uncle sam is buying Tesla? It will most likely be from the big three.

    • Re:This is a massive waste of time (Score:5, Insightful)

      by imidan ( 559239 ) on Tuesday February 02, 2021 @02:36AM (#61018112)

      Nancy Pelosi's husband [yahoo.com] invested $1million in Tesla calls last December, and wouldn't you know it, the US government just announced a move to an all-electric fleet.

      Neither insider information nor a crystal ball are necessary to predict, after a presidential election that a Democrat won, that federal policy would favor electric vehicles in the near future.

      • Nancy Pelosi's husband [yahoo.com] invested $1million in Tesla calls last December, and wouldn't you know it, the US government just announced a move to an all-electric fleet.

        Neither insider information nor a crystal ball are necessary to predict, after a presidential election that a Democrat won, that federal policy would favor electric vehicles in the near future.

        Especially when the government would likely buy Chevy or Ford. I doubt they could easily dismiss the outrage coming from taxpayers by wrapping lawmakers in a government-provided vehicle that is far more fashion statement than car right now.

    • One of the most recent examples: Nancy Pelosi's husband invested $1million in Tesla calls last December, and wouldn't you know it, the US government just announced a move to an all-electric fleet.

      And approximately 0% of those (rounded off) will come from Tesla. Nothingburger.

      Last year, you had the former Republican Senators from Georgia (David Perdue and Kelly Loeffler) pulling similar stunts thanks to insider knowledge, and nothing came of it.

      Last year you had a Republican congress, and they protect their own.

  • The customer is the product. (Score:5, Interesting)

    by microbox ( 704317 ) on Monday February 01, 2021 @11:18PM (#61017864)
    People on Robin Hood pay no fees. They are the product. Robin Hood resells live trading data. Furthermore, it takes a few days for trades to clear, and the broker has to have liquidity so that the customer can actually make their trades. WallStreetBets could well have burned through Robin Hood's liquidity, and Robin Hood's broker. The complaints would be far larger if customers couldn't exit their leveraged positions because they'd gummed up the internal workings of the brokerage houses.

    • WallStreetBets could well have burned through Robin Hood's liquidity, and Robin Hood's broker.

      Bullshit. If that were true they shouldn't just limit trading one stock. They should go full black-out until they have the means to continue their business. What they did was clear market manipulation.

    • Re: (Score:2)

      by jebrick ( 164096 )

      People on Robin Hood pay no fees. They are the product. Robin Hood resells live trading data. Furthermore, it takes a few days for trades to clear, and the broker has to have liquidity so that the customer can actually make their trades. WallStreetBets could well have burned through Robin Hood's liquidity, and Robin Hood's broker. The complaints would be far larger if customers couldn't exit their leveraged positions because they'd gummed up the internal workings of the brokerage houses.

      I would mod this up if I had points.

      No one is talking about all the other clearinghouses who also had to stop trading on GameStop( eTrade Swaube) and it will come up that they were following the rules that Congress made after 2008 to halt trading if they did not have enough capital on hand to cover the trades.

      Should they be mad that the app that sells your info of your trade to a hedge fund and partners before they make the trade so the hedge fund use arbitrage to make some filth lucre? Will the masses get

  • Congressional hearings (Score:5, Interesting)

    by mrsam ( 12205 ) on Monday February 01, 2021 @11:30PM (#61017882) Homepage

    Can someone help me out and tell me when was the last time congressional hearings resulted in any kind of concrete legislative action that were tied to those hearings? Let's try to be specific. Let's set the bar a little lower. Let's forget about anything that was actually signed into law, but settle any piece of legislation that: 1) substantiavely addressed the hearings' subject matter, and 2) cleared either the House or the Senate, whichever one held the hearings?

    From what I can recall they're always nothing more than an opportunity for the congresscritters to grandstand and preen before the cameras, pretending That They Care[tm] about whatever prompted the hearing, while accomplishing absolutely nothing, whatsoever.

    • https://science.house.gov/hear... [house.gov]
      It mostly looks like "Learning Annex" type stuff, but they also ask department heads why they want so much money. (This is just the Science committee, it seems.)

    • Having a congressional hearing about steroids in baseball was the pinnacle of absurd.

    • You hit the nail on the head. If they were concerned, they would have the DOJ or SEC doing an investigation, not let their department heads take hundreds of thousands in speaking fees from these same companies and then refuse to take themselves out of any advisory or investigative role on the matter of these same companies.

    • It's literally pandering for pandering's sake. Nine times out of ten they'll wag their fingers at whoever is standing in front of the committee in question, then hang out with them for hours afterwards celebrating yet another smoke and mirrors show while discussing how much lobbying money they'll get tossed to not bring it up again.

    • You're absolutely right, it's all a dog and pony show. Congress gets to appear to care in front of the voters by "asking tough questions" and then they can get right back to ignoring the problems lest they piss off their true masters.

  • Maxine Waters? Wow. (Score:3, Insightful)

    by memory_register ( 6248354 ) on Monday February 01, 2021 @11:39PM (#61017902)
    She's one of the most corrupt members of congress. She was named the Most Corrupt Member of Congress by the Citizens for Responsibility and Ethics in Washington (CREW).

    Having her investigate anyone for ethics is like letting satan guard the pearly gates.

    • Maxine Waters: Jar Jar binks was better (Score:4, Informative)

      by mveloso ( 325617 ) on Tuesday February 02, 2021 @01:00AM (#61018016)

      Jar Jar Binks is a genius compared to Waters. Her constituents keep voting her in, so we can't get rid of her.

      Think racist Republicans are bad? She was the original mold.

      • Jar Jar Binks is a genius compared to Waters. Her constituents keep voting her in, so we can't get rid of her.

        Constituents need to challenge every single candidate running for Federal office to vote for term limits. When they refuse, ensure it is their last term in office by voting them out. If we can't have term limits on the books, we'll have term limits created the old fashioned way. Enough of the corrupt constituencies providing lifetime memberships to lawmakers.

        Voters need to stop complaining about The Swamp when they refuse to flush The Toilet.

        • Constituents need to challenge every single candidate running for Federal office to vote for term limits

          Not going to fucking happen. Term limits will require a constitutional amendment. Since Congress has to approve them event the most retarded member, *cough* Cortez *cough*, isn't going to fuck that goat. It will take a constitutional convention called by the states for that to happen.

    • Just ask her how much she wants to make it go away.

    • Re: (Score:2)

      by ytene ( 4376651 )
      I wasn't aware of this, but thanks to your post went digging. Found a few of articles on it (here [freedomworks.org], here [newspunch.com] and here [newspunch.com].

      There's nothing in here that stands out in terms of poor judgement - paying her daughter significant sums of money from campaign contributions and intervening on behalf of a small bank where her husband had previously served on the board and where she potentially still had a financial interest - but what strikes me as entirely unacceptable is that, well, it's 2021.

      How can anyone reasonably

  • Robinhood probably didn't have a choice (Score:3)

    by jonwil ( 467024 ) on Monday February 01, 2021 @11:54PM (#61017918)

    When you buy a stock, the transaction doesn't process for a few days. But the broker (and/or their clearinghouse) has to pay a deposit up front right away.

    This is normally a few percent of the transaction but when these stocks started becoming so volatile and going so high, the deposit requirements were raised much higher (100% in some cases).

    These brokers and clearinghouses don't have the cash reserves to pay these deposits and if they continued to accept buy orders on these volatile stocks, it could put brokers and others out of business and cause issues for the entire market (including normal people wanting to make normal everyday stock market trades)

    The big players have the cash reserves to meet the new deposit requirements which is why they can afford to keep buying.

    • That is BS, if they act like a bank, they should have reserve funds like a bank. The reason RobinHood didnâ(TM)t have sufficient funds is because their bank (Citadel Securities) ran by the same people that ran itâ(TM)s parent Citadel bet against these stocks and lost massive.

      These funds lost a combined $21B betting against their own customers and others being able to hold their stock. And itâ(TM)s quite an ingenious system if it doesnâ(TM)t get gamed - buy things people can relate to but

      • They do have reserves like a bank. If everyone at Wells Fargo suddenly called and wanted their deposits in cash that day, they'd be screwed. When people tried to get funds into RH (by transfer or selling stock) they wanted to play with the money instantly but it wouldn't be there for 2 days. RH raised a billion dollars in cash and it wasn't enough.

      • Re: (Score:3)

        by Imsdal ( 930595 )
        This is just factually wrong on every level. Robinhood isn't a bank, they are a broker. They also act as their own clearer. As such they have some amounts of money to post collateral to the clearing houses that settle the trades their users execute through them. When GME and other meme stocks exploded, both the volatility and the price exploded. This meant that RH had to post significantly higher amounts of capital than they usually have to do. More money than they had, in fact, so they had to limit trading

    • Re: (Score:2)

      by alexo ( 9335 )

      When you buy a stock, the transaction doesn't process for a few days.

      What is the reason in this day and age for the transactions not to be instantaneous?

      • I don't know, but RH is a small fish in a much bigger sea that has timeframes listed in terms of days to do X. So, you know, they cannot make everyone else go faster.

      • Re: (Score:2)

        by Imsdal ( 930595 )
        This is a good question. The US switched from T+3 to T+2 in 2017. For the life of me, I can't understand why they didn't go directly to T+0 when they were making the change anyway. However, do note that this wouldn't have solved the issue. Every clearing member, including RH, would still be expected to pledge collateral to the clearing house (DTC in this case). But sure, the collateral requirements would probably drop a bit, and maybe they would have dropped enough so that RH would have been able to meet th

        • If all stock transactions are atomic swaps between currency and stocks held in escrow at electronic exchanges there is no more need for clearing ... you still want a government agency to keep track of stock identity and (delegated) ownership, but there's nothing to clear and thus no need for collateral.

        • This is a good question. The US switched from T+3 to T+2 in 2017. For the life of me, I can't understand why they didn't go directly to T+0 when they were making the change anyway.

          One possibility: If you want a resilient system (to events like Hurricane Sandy in 2012), you want to leave time for your backup processes to take over.

          However, do note that this wouldn't have solved the issue. Every clearing member, including RH, would still be expected to pledge collateral to the clearing house (DTC in this case). But sure, the collateral requirements would probably drop a bit, and maybe they would have dropped enough so that RH would have been able to meet them.

          Totally agree -- at some point the risk is mostly about extreme events that cannot be modeled, rather than the more-easily-characterized movements of asset prices.

          Probably not, though; they would just have had less working capital to start with, in all likelihood.

          Astute observation! They are clearly the type of company comfortable with playing closer to the edge than some of the conservative white-shoe institution.

          • Re: (Score:2)

            by Imsdal ( 930595 )

            One possibility: If you want a resilient system (to events like Hurricane Sandy in 2012), you want to leave time for your backup processes to take over.

            I don't understand that to be the case. They take on the trades on T+0, do nothing until T+2, then do their thing. If the hurricane hits, it would cause the same issues today, only two days later.

            • One possibility: If you want a resilient system (to events like Hurricane Sandy in 2012), you want to leave time for your backup processes to take over.

              I don't understand that to be the case. They take on the trades on T+0, do nothing until T+2, then do their thing. If the hurricane hits, it would cause the same issues today, only two days later.

              Well, they pretty much do line everything up at T+0. On several occasions I have seen late-night messages from the back office (trade settlement team) about mistakes ("out-trades") that had occurred earlier the same day. Those messages never came as late as T+2. (This was true of both over-the-counter telephone trading and electronic market trading.

              If computer systems were down in the evening, obviously this would not have been possible. I do not completely recall what happened during Sandy, but I thin

  • I bet (Score:1, Funny)

    by mattfosser ( 6851036 )
    I bet Maxine Waters will be RECLAIMING HER TIME.
  • The same people that own Water (and probably Slashdot) also own a large stake in Robinhood. They are either large investors in it or they are large customers (or both) of the data that Robinhood collects. She'll ask some questions which will lead to a lot of hand-wringing and then there will be lots of "concern" and "uncovering" of "troubling" facts. It's a dog and pony show. Watch the congressional hearings in the movie "game show" to see how this works. The only difference this time will be some crap

    • Re: (Score:1)

      by ebvwfbw ( 864834 )

      Maybe. I've had to explain technical things to intellectual illiterates before. It's no fun. Even explaining to her what a short is would be tough. Wish him luck. He'll need it.

  • Back in 2009 Chris Dodd excoriated banking executives because, horror or horrors, his team looked into it and it turns out that poor people paid the lions share of "overdraft" and "insufficient funds" fees - he literally, with a straight face asked the bankers to explain this disparity!

    (I think it was here, but a quick scan of the transcript didn't turn it up.)

    Apparently, it would be more fair if people with sufficient funds were charged fees by the banks for having the money to cover their spending...

    My se

  • I wonder how much money Mad Maxine has lost due to this.

  • TD should be called onto the red carpet also. Their shutdown cost me thousands due to unrelated trades going wrong.

    • Re: (Score:1)

      by ebvwfbw ( 864834 )

      TD should be called onto the red carpet also. Their shutdown cost me thousands due to unrelated trades going wrong.

      I'd like to call the whole bunch of them up there. I'd grill them good. Of course I'm sure they'd simply say - these are regulations from FINRA or the Government and we're just following the law. I've lost tens of thousands due to their BS.

  • Tenev donated $2800 to Maxine Waters People Helping People and also to McHenry's Innovation PAC and $2800 to his WinRed PAC
    These were the only contributions made by Tenev.

  • Sure, it can start with a testimony about corruption from Robinhood. Let's trace it higher up the line, where the pressure came from, what generates the capitol that causes that pressure, and a financial audit before funds are hidden to show illegal activities.

    Just kidding, it's accepted corruption at this point

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