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Gamers in GameStop market drama make their case to lawmakers By Reuters

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© Reuters. 3D printed Robinhood and Reddit logos will appear in front of the GameStop logo that is displayed

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By Pete Schroeder

(Reuters) – Wall Street hedge fund executives, the executives of Robinhood and Reddit, and a YouTube streamer named Roaring Kitty defended their roles in GameStop’s (NYSE 🙂 ‘s RedStit-powered stock rally on Wednesday before being grilled by lawmakers become .

They insisted that while the market turmoil surrounding the stock was unprecedented, there was no foul, as an official testimony from the House Financial Services Committee revealed the day before a scheduled hearing. (https: //

Last month’s Reddit rally created massive volatility in GameStop and other stocks, prompting the post-trade clearing houses that guarantee stores to request billions in collateral from Robinhood and other retail platforms.

In response, many stopped buying the affected stocks on Jan. 28. This outraged lawmakers, who questioned whether the trading platforms were on the side of hedge funds that had bet against the stocks through mom and pop investors.

Vladimir Tenev, CEO of online brokerage Robinhood, wrote on his testimonial that the decision to discontinue the purchase was entirely due to the need to meet regulatory capital requirements.

Gabriel Plotkin said he was “humble” when his hedge fund Melvin Capital Management suffered significant losses on the short end of the trade, but insisted that his firm do not press Robinhood to suspend trading.

Likewise, Ken Griffin, CEO of Citadel LLC hedge fund and majority owner of Citadel Securities, a market maker who handles most of Robinhood’s client orders, has denied speculation that his company tried to influence Robinhood’s decision.

“Let me be very clear: we had no role in Robinhood’s decision to restrict trading in GameStop or any other meme stock. I only learned of Robinhood’s trading restrictions after they were made public,” he wrote.

Keith Gill, who has been promoting his GameStop investment on his Roaring Kitty and Reddit YouTube channel for months, insisted that his position was based solely on publicly known fundamentals of the business and that it was “absurd” to suggest he want ignorant investors to buy Mislead stocks.

Steve Huffman, CEO of Reddit, said the company analyzed traffic on the Reddit sub-feed WallStreetBets, where users gather to discuss stocks. The company found that no bots, foreign agents, or bad actors played a major role in any traffic that sparked interest in GameStop.

“WallStreetBets is first and foremost a real community,” he said.

On Thursday, the House Committee will hear from the five men as well as Jennifer Schulp, director of financial regulation studies at the Cato Institute.

Legislature has turned most of its anger on Robinhood, but Tenev insisted his company had no choice but to suspend the purchase. He provided detailed information on the clearing house’s demands on the company to provide billions in additional collateral to meet regulatory requirements.

He also rejected the idea that Robinhood was acting at the behest of hedge funds, calling such speculation “absolutely false and market-distorting rhetoric” while noting the client agreement and securities rules that allow him to freeze trading.

Griffin took the opportunity to highlight deficiencies in the post-trade infrastructure, noting that faster settlement times and “transparent clearing house capital requirements” could help reduce risks for brokers like Robinhood and its clients.

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