Congress Schedules Hearings After GameStop Market Frenzy and Robinhood Trade Freeze
Partisan congress unified by outrage over applicationand other retail equity trading companies have frozen some individual trades in response to a powered by Internet discussion forums. Some hedge funds had bet big on the downfall of these companies, and the resulting volatility and Robinhood’s willingness to impose restrictions in a way that seemed to favor the big investors and punish the smaller ones annoyed Democrats and the smaller ones. republicans.
“Fully agree,” tweeted Senator Ted Cruz, one of the most conservative senators, in response to a tweet from Representative Alexandria Ocasio-Cortez, a Democratic socialist who berated Robinhood for deciding “to prevent retail investors from buying stocks when hedge funds can freely trade stocks as they see fit.”
Leaders of the House and Senate committees responsible for overseeing the financial sector plan to hold hearings on Robinhood’s decision and the circumstances that led to the market changes.
“We need to deal with hedge funds whose unethical conduct has directly led to recent market volatility and we need to look at the market in general and how it has been manipulated by hedge funds and their financial partners to derive from it. profit while others pay the price, ”said Maxine Waters, chair of the House financial services committee.
Rep. Patrick McHenry, the leading Republican on the committee, said in a statement he had asked Waters to call a hearing.
On Capitol Hill Thursday afternoon, Cruz called for transparency and said lawmakers demanded to know why Robinhood had halted trading in defended stocks on Reddit by WallStreetBets and other discussion forums.
Moderate Republican Senator Pat Toomey called the retail investor freeze “very disturbing,” but also expressed concern that the trading frenzy would end. “By the way, it’s going to end badly for the most part, it’s a bubble, it’s going to burst and it’s going to end up collapsing in the price,” Toomey said.
The new chairman of the Senate Banking Committee, Sherrod Brown, also said he plans to hold a hearing on the matter.
“American workers have known for years that the Wall Street system is broken. They are paying the price. It is time the SEC and Congress made the economy work for everyone, not just Wall Street,” we read in his statement.
During television interview Thursday, Senator Elizabeth Warren directly targeted the US Securities and Exchange Commission, accusing the agency of failing to set rules and letting the stock market turn into a “casino.”
“We need an SEC that will step up, put in place clear rules and then be ready to enforce those rules,” Warren said.
On Wednesday evening, the SEC released a statement saying it was “monitoring continued market volatility” and would work with regulators to assess the situation.
During the White House press briefing on Thursday, press secretary Jen Psaki referred reporters to the SEC statement and declined to comment further. Psaki said on Wednesday that members of the economics team, including Secretary Janet Yellen, were also monitoring the situation.
On Thursday evening, an email from Robinhood to users of the service said it would allow “limited purchases” of GameStop and AMC titles on Friday.
Despite their common response to the actions of e-commerce services, tensions between political parties remained after the January 6 Capitol riots.
“I’m happy to work with Republicans on this issue where there is common ground, but you almost got me murdered 3 weeks ago so you can sit on this one,” Ocasio wrote -Cort in a tweet responding to Cruz’s support for his position on Robinhood. .