Wall Avenue hedge fund managers, the chief executives of Robinhood and Reddit and a YouTube streamer generally known as Roaring Kitty on Wednesday defended their roles in GameStop’s Reddit-fueled inventory rally earlier than they face a grilling by lawmakers.

They insisted that whereas the market turmoil across the inventory was unprecedented, there was no foul play, in response to official testimony revealed by the Home Monetary Providers Committee a day earlier than a scheduled hearing.

Final month’s Reddit rally drove massive volatility in GameStop and different shares, prompting the post-trade clearing homes that assure trades to name for billions of {dollars} in collateral from Robinhood and different retail buying and selling platforms.

In response, many suspended shopping for within the affected shares on Jan. 28. This outraged lawmakers, who questioned if the buying and selling platforms had been siding with hedge funds that had guess in opposition to the shares over Mother and Pop traders.

Vladimir Tenev, CEO of on-line brokerage Robinhood, wrote in his testimony that the choice to halt shopping for was solely as a result of want to fulfill regulatory capital necessities.

Gabriel Plotkin stated he was “humbled” when his hedge fund Melvin Capital Administration suffered vital losses on the brief finish of the commerce, however insisted his agency didn’t push Robinhood to droop buying and selling.

Likewise, Ken Griffin, CEO of hedge fund Citadel LLC and majority proprietor of Citadel Securities, a market maker that handles most of Robinhood’s buyer orders, disputed hypothesis that his agency tried to affect Robinhood’s determination.

“I need to be completely clear: We had no position in Robinhood’s determination to restrict buying and selling in GameStop or another of the ‘meme’ shares. I first discovered of Robinhood’s buying and selling restrictions solely after they had been publicly introduced,” he wrote.

Keith Gill, who touted his GameStop funding for months on his Roaring Kitty YouTube channel and Reddit, insisted his place was solely based mostly on publicly recognized fundamentals of the enterprise and it was “preposterous” to counsel he sought to entice unwitting traders to purchase shares.

Reddit CEO Steve Huffman stated the corporate had analyzed site visitors on the Reddit sub-feed WallStreetBets the place customers congregate to debate shares. The corporate discovered no bots, overseas brokers or dangerous actors performed a big position in a site visitors that helped drive curiosity in GameStop.

“WallStreetBets is before everything an actual group,” he stated.

Lawmakers have directed most of their ire at Robinhood, however Tenev insisted his firm had little alternative however to droop shopping for. He offered in depth element on calls for from clearing homes for the agency to place up billions of {dollars} in further collateral to fulfill regulatory necessities.

He additionally dismissed the concept that Robinhood acted at behest of any hedge funds, calling such hypothesis “completely false and market-distorting rhetoric,” whereas noting its buyer settlement and securities guidelines give it discretion to freeze buying and selling.

Griffin used the chance to level to flaws within the post-trade infrastructure, noting that sooner settlement occasions and “clear clearing home capital necessities,” might assist scale back dangers to brokers like Robinhood and its prospects.



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