The hearing will not be the last inquiry that the executives at the center of the controversy will face. “I saw someone on Twitter describe it as a Rorschach test for financial regulators,” he added. “These are huge investor protection questions. “What would have happened if Robinhood had failed? What would have been the knock-on effects for financial markets?” he asked. More broadly, he said, GameStop had highlighted many crucial issues for regulators, including the role and regulation of hedge funds, whether or how Wall Street is using social media to drive investment strategy, the “gamification” of investing by trading apps and the economic incentives at play for the trading platforms. Gelzinis said there were still questions about the timeline of events. Gregg Gelzinis, associate director for economic policy at the Center for American Progress, said: “The GameStop drama raised quite a few public policy questions but first it’s important for members of Congress to understand how events played out.” The hearing marks the first time the major players in the GameStop controversy have all been forced to publicly reckon with the anger the episode provoked among small investors and across the political spectrum. Keith Gill, a trader variously known online as Roaring Kitty and DeepFuckingValue and a longtime GameStop booster. Ken Griffin, billionaire CEO of Citadel, an investment firm that executes Robinhood clients’ trades and also helped to bail out Melvin. Gabe Plotkin, founder of the Melvin Capital Management hedge fund, which was forced into a rescue after retail traders crushed its bets against GameStop. Ocasio-Cortez sits on the bipartisan financial services committee.
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Unverified claims of insider trading and stock market manipulation have also been thrown around, but it remains to be seen what, if any, legal action could be taken against the so-called “Short Squeezers.Fully agree.
![reddit robinhood app reddit robinhood app](https://techcrunch.com/wp-content/uploads/2021/01/Screen-Shot-2021-01-28-at-10.45.20-AM.jpg)
Already we’ve heard calls to bail out hedge fund investors, which might be the least appealing sentence I’ve ever typed. However, many hedge fund investors are now on the hook to buy back Gamestop stocks at over 50 times what they sold them for. Effectively, they’re betting the value of the stock will drop so they can keep the difference in what they sell and buy it for. Other stock trading apps have been slowed to a crawl as people pour into the app to try and get in on the action.įor those not in the know, a short is when a client borrows stock and sells it with the agreement that they’ll buy it back later. The backlash to the decision has been fierce, with people lambasting Robinhood all over social media and people calling for shorting the stocks of their partner companies. The stock purchasing has grown so out of control that Robinhood, a consumer stock trading app has barred purchases of stocks like Gamestop, Nokia, and AMC. The unprecedented public purchasing of stock has spilled over into other companies such as AMC, Nokia, Blockbuster, and Bed, Bath, and Beyond. The move sent the value of Gamestop stock skyrocketing as much as 9300% from where it was on January 6th.
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Realizing that a large number of hedge fund investors were betting on Gamestop to fail, the r/wallstreetbets subreddit rallied people to buy up and hang on to the stock.
![reddit robinhood app reddit robinhood app](https://deadline.com/wp-content/uploads/2021/02/Reddit.png)
Sports Hub Headlines Sent to Your InboxĪ subreddit has shown the power of the people when it comes to the stock market.