Sen. Warren slams Robinhood ahead of GameStop hearing
The hearing, coined 'Game Stopped,' starts Thursday at 12 p.m. ET
The GameStop hearing, hosted by the House Committee on Financial Services, is set for tomorrow but Sen. Elizabeth Warren, D-Mass., isn’t waiting to lash out at trading app Robinhood.
On Wednesday, Warren released a response she got, dated Feb. 12, from the firm after requesting more information in a letter on why it abruptly restricted trading last month in some of the most heavily shorted stocks jolting the retail and Reddit investor community.
| Ticker | Security | Last | Change | Change % |
|---|---|---|---|---|
| GME | GAMESTOP CORP. | 27.27 | -1.78 | -6.13% |
"Robinhood's response to my letter reveals that the company did not have enough cash on hand to manage a surge in trading and buried important information about consumers' rights,” said Warren in a statement.
“Robinhood promised to democratize trading, but hid information about its prerogative to change the rules by cutting off trades without notice -- and about customers' inability to access the courts if they believe they've been cheated -- behind dozens of pages of legalese,” she said.
Along with GameStop, Bed Bath & Beyond, AMC, BlackBerry and Nokia were among the stocks caught up in the action.
| Ticker | Security | Last | Change | Change % |
|---|---|---|---|---|
| BBBY | NO DATA AVAILABLE | - | - | - |
| AMC | AMC ENTERTAINMENT | 5.04 | +0.09 | +1.82% |
| BB | BLACKBERRY LTD. | 2.56 | -0.01 | -0.39% |
| NOK | NOKIA OYJ | 4.20 | 0.00 | 0.00% |
Silver prices also saw heavy trading, while it was unclear whether the Redditt community was involved.
| Ticker | Security | Last | Change | Change % |
|---|---|---|---|---|
| SLV | ISHARES SILVER TRUST - USD | 27.93 | +0.48 | +1.75% |
Specifically, Warren criticized the firm’s arbitration process, detailed in the fine print of its customer agreement.
CME RAISES SILVER MARGINS AFTER SURGE, CFTC ON ALERT
While the firm noted its agreement is “consistent with FINRA regulations” it did signal it was open to a change. “RHF is open to reviewing its use of arbitration and will continue to be guided by what is in its customers’ best interests with respect to resolving customer complaints” the letter stated.
Robinhood Response to Feb 2 Letter by FOX Business on Scribd
ROBINHOOD FACES CLASS-ACTION LAWSUIT OVER TRADING PLATFORM THAT’S ‘DESIGNED TO GO DOWN’
Robinhood is facing legal action from customers stemming from the decision which prevented customers from accessing their accounts.
On Thursday Warren and other members will get the opportunity to virtually grill the following players about their roles in the trading frenzy.
- Vlad Tenev, CEO, Robinhood Markets, Inc.
- Kenneth C. Griffin, CEO, Citadel LLC
- Gabriel Plotkin, CEO, Melvin Capital Management LP
- Steve Huffman, CEO, co-founder, Reddit
- Keith Gill also known online as RoaringKitty
Warren also indicated she was not satisfied with Robinhood’s update on its relationship with hedge funds and market makers. Last month, Citadel, run by billionaire Ken Griffin, shot down rumors it was involved in Robinhood’s decision.
CITADEL SHOOTS DOWN ROBINHOOD LINK
“Citadel is not involved in, or responsible for, any retail brokers’ decision to stop trading in any way,” a spokesperson for the hedge fund said in a statement at the time.
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The hearing is set to begin at 12 p.m. ET Thursday.