GameStop Hearing With Roaring Kitty and Robinhood C.E.O.: Live Updates
transcript
transcript
Robinhood C.E.O. Faces Scrutiny From House Lawmakers
Vlad Tenev, the chief executive of Robinhood, apologized for temporarily limiting trading of GameStop after Jan. 28, but said his company did nothing wrong at a House Financial Services Committee hearing on GameStop.
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“Jan. 28 proved to be a completely unprecedented event — the spike in trading activity and volatility meant that Robinhood securities, our clearing broker, had to hold the line and post additional firm capital as collateral to support our clearinghouse deposit demands. To put it in perspective, on Jan. 28, our daily deposit requirement was 10 times more than on Jan. 25. As a result, Robinhood securities, along with many other firms, imposed temporary trading restrictions on certain securities. Robinhood securities put the restrictions in place in an effort to meet increased regulatory deposit requirements, not to help hedge funds. We don’t answer to hedge funds. We serve the millions of small investors who use our platform every day to invest. At the end of the day, what happened is unacceptable to us — to our customers, I’m sorry, and I apologize. Please know that we are doing everything we can to make sure this won’t happen again.” “You explain that Robinhood restricted transactions in certain securities to meet demands coming from your clearinghouse. And yet on Jan. 28, you represented to the media that there was no liquidity problem. Isn’t it true that being concerned about having enough capital to meet deposit requirements, isn’t that a liquidity problem — could you just answer yes or no?” “Chairwoman Waters, I appreciate the opportunity to address that.” “Just yes or no.” “We always felt comfortable with our liquidity, and the additional capital that Robinhood raises.” “Please answer yes or no.” “We always felt —” “I don’t have time. I just need a yes or no answer.” “I stand by my statement. The additional capital we raised wasn’t to meet capital requirements or deposits —” “Will the gentleman — I’m reclaiming my time, this liquidity problem had real consequences for your customers.” “One in 3.5 million event, basically is unmodelable. That said, we can learn from it. And in this particular case, our risk management processes work really to keep us in compliance with all of our deposit requirements and collateral requirements.” “Mr. Tenev, I realize that you are doing a full review of your practices as such. I encourage you to do that. And certainly communication with your investors is going to be key to that because you didn’t communicate with them early on.”
The chief executive of the online brokerage firm Robinhood, Vlad Tenev, faced anger from members of Congress from the opening moments of the House Financial Services Committee hearing on GameStop.
As Mr. Tenev began introducing himself and his company, the chairwoman of the panel, Representative Maxine Waters, told him to get to the point and “talk directly to what happened on Jan. 28.”
Mr. Tenev apologized to his users for stopping certain customer trading during the peak of the frenzy. But Mr. Tenev was insistent that Robinhood did nothing wrong and did not privilege powerful business partners at the expense of small investors, as some critics have suggested.
“We don’t answer to hedge funds,” Mr. Tenev said. “We serve the millions of small investors who use our platform every day to invest.”
Mr. Tenev said it was forced to stop certain trading because its business partners, the clearing houses that perform trades on Robinhood’s behalf, significantly increased the requirements for the…
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