Lawmakers facing off with GameStop saga's key players
WASHINGTON (AP) — Lawmakers in Washington are digging into the GameStop saga at a congressional hearing.
The episode has been portrayed as a victory of the little guy over Wall Street titans, but not everyone is buying it. Lawmakers from both parties are among the skeptics.
GameStop shares soared 1,600% in January before falling back to Earth. Entangled in the drama are huge short-selling hedge funds, a social media message board and ordinary investors wanting in on the hottest new trade.
The House Financial Services Committee holds a hearing Thursday. The head of the panel, Rep. Maxine Waters, D-Calif., is homing in on hedge funds, which she says have a history of “predatory short-selling."
“We must deal with the hedge funds whose unethical conduct directly led to the recent market volatility,” Waters said in a statement.
With short-selling, investors bet a stock’s price will drop. Defenders of the practice say it's a tool for uncovering a stock's true value and due-diligence investigating of companies.
The players in the hearing include a swaggering 34-year-old YouTube personality and GameStop evangelist; one of the richest and most prominent investment tycoons; and the CEO of the online platform Robinhood that hosted a tsunami of speculative GameStop trading but faced intense criticism for restricting trading at the height of the frenzy.
The CEO, Vlad Tenev, is denying speculation from some lawmakers that Robinhood acted to favor its big Wall Street clients when it blocked customers on Jan. 28 from buying shares of GameStop and a dozen other companies. The restrictions lasted in some form for days.
The accusation is that Robinhood changed the rules of the road midway through to favor big clients that stood to lose money if GameStop shares kept rising.
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