Robinhood CEO Vlad Tenev on Jan. 29 pushed back against the “conspiracy theory” that hedge funds prompted the mobile brokerage company’s decision to restrict users from purchasing shares in GameStop.
Members of Congress have in recent days called for an investigation into whether there was collusion by hedge funds and platforms like Robinhood, after purchases of hot stocks like GameStop, KOSS, and AMC were restricted by various platforms.
Shares of video game retailer GameStop Corp. have soared 1,625 percent since the start of January. Driving the rally are individual investors, many whom have been at home for the last 10 months because of pandemic-related lockdowns. Many have turned to online forums like WallStreetBets on Reddit and are buying the stocks, some as a form of protest against what they see as unscrupulous behavior by hedge funds.
“I think I’ve over and over again said that it’s not true,” Tenev said. “Our decision to temporarily restrict customers from buying certain securities had nothing to do with a market maker or a market participant or anyone like that putting pressure on us or asking us to do that.”
“It was entirely about market dynamics and clearing house deposit requirements, as per regulation,” he added.
“Look, I think we—everyone at Robinhood operates this company with integrity and, first and foremost, looking out for our customers, the individual investors, and their best interests,” Tenev said in a separate interview with Yahoo Finance when asked what discussions he has had with lawmakers.
“Of course, we are constantly in communication with our regulators and with lawmakers. And we continue to do so. And you know, I look forward to having conversations with anyone about this.
“Because I think, obviously, it’s highly technical and involves settlement mechanics, as you guys saw in some of your other conversations. And I think Robinhood made the right decision here,” he added.
The Securities and Exchange Commission (SEC) on Friday issued a rare joint statement from its acting chair and commissioners. It said it was working closely with other regulators and stock exchanges “to protect investors and to identify and pursue potential wrongdoing” and would “closely review actions … that may disadvantage investors” or hinder their ability to trade stocks.
“I think if you look at this entire situation, it’s a novel situation,” Tenev told Fox News. “A relatively small number of stocks have gone viral on the Internet. And as things that go viral on social media and the Internet do, there’s an exponential growth in interest. And so we have to be prudent. And we have to have a prudent risk management. And that’s what the firm did.”
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