New York (AFP)

Several key players in the GameStop saga, which destabilized Wall Street at the end of January, defended themselves Thursday for having sought to manipulate the stock market in the face of US deputies anxious to shed light on certain practices of hedge funds and brokerage platforms .

Entitled “Game Stopped: Who are the winners and losers when short sellers, social networks and small carriers collude?”, The hearing was organized by videoconference by the Financial Services Commission of the House of Representatives.

Parliamentarians sought to determine whether fraudulent practices caused the extreme volatility in U.S. financial markets last month.

A movement of panic seized the New York Stock Exchange when an army of amateur investors, trading in particular on a forum on the Reddit site, had invested heavily in several companies in faltering financial health, including the chain of game stores GameStop video.

The group's stock suddenly surged before giving up much of its gains in the following weeks.

By going to GameStop and a few other companies, many stock marketers wanted to prove the big hedge funds and Wall Street barons wrong, who had bet on a stock market collapse of these companies.

- "No pressure" -

Several brokerage platforms had found themselves under fire from critics for having limited, at the height of the speculative fever, the purchases of the title GameStop and other businesses highly sought after by small carriers.

The Robinhood app, popular with millennials, had faced a surge of negative comments, with many accusing the company of being behind the investment funds with which it does business.

Faced with deputies on Thursday, his boss, Vlad Tenev, apologized to his clients but assured that he had not suffered "any pressure".

“All I can say is Robinhood played by the rules,” Tenev insisted.

He reiterated that his company had to impose restrictions to meet the liquidity levels demanded by clearing houses to ensure that stock transactions are completed.

- "Colossal losses" -

Tense exchanges also took place between the deputies and Mr. Tenev as well as with the financier Ken Griffin, founder of the hedge fund Citadel, around the "payment for flow of orders".

This controversial practice allows brokerage platforms to earn money on a transaction by benefiting from a preferential rate from market makers (of which Citadel is one).

The difference between the price offered to customers and the "real" price of the transaction is seen by some as a cost which is not disclosed clearly enough to small holders.

New York Democrat Congresswoman Alexandria Ocasio-Cortez asked Tenev if he was prepared to return the profits from order flow payments to Robinhood clients, which the executive did not directly agree to do.

For his part, Gabriel Plotkin, head of the investment fund Melvin Capital, which had bet on a decline on GameStop, conceded "colossal losses" when the stock suddenly rose in late January.

Like the other witnesses, he brushed aside accusations of stock market manipulation.

- "I am not a cat" -

Another highlight of the hearing was testimony from Keith Gill, who rose to fame on Reddit and YouTube for betting on a GameStop hike long before the January saga.

The one who calls himself "Roaring Kitty" ("Roaring Kitty") on the internet presented himself as a non-institutional investor who had thoroughly analyzed the GameStop model.

“I believe the current share price proves that I was right about this company,” said Mr. Gill.

"I'm not a cat," he also joked, referring to a recent viral video where a Texas lawyer appears with a chat filter during a video conference hearing on Zoom.

Mr. Gill's performance was praised by many netizens, who appreciated his relaxed style and short, direct responses.

“I'm buying GameStop shares today out of respect for DeepFuckingValue (another Mr. Gills alias),” wrote a member of Reddit's WallStreetBets forum.

The price of GameStop's title even briefly took off during Mr. Gill's intervention before falling again.

Two other hearings are scheduled during which stock market regulators and experts from the world of finance will speak to MEPs from the Financial Services Commission.

© 2021 AFP