China News Service, New York, February 18-The US House of Representatives Financial Services Committee held a hearing on the market volatility of GameStop and other stocks on the 18th. The core parties involved in the incident all appeared to accept questions.
Affected by the new crown epidemic, this hearing was conducted using online video technology.
At the beginning of the hearing, online brokerage firm Robinhood CEO Vlad Tenev was asked to explain why customers were previously prohibited from buying shares such as Game Station but not from selling.
Tenev replied that if selling is prohibited, customers will be very angry, "Restricting selling will bring a difficult experience to customers and they will not be able to use their own funds."
At the end of January this year, an army of US stocks retail investors launched a "short-sell war" against Wall Street hedge funds' short-selling targets. The stock prices of US stocks represented by Game Post have soared, forcing hedge funds to liquidate their short positions.
At the beginning of January, the share price of Game Station was less than $20, and it rose to a maximum of $483 at the end of January.
Subsequently, online brokerages such as Robinhood announced the implementation of trading restrictions on stocks targeted by retail investors.
Tenev mentioned in his testimony that the American Depositary Trust and Clearing Corporation had raised capital requirements. Robinhood had insufficient funds at the time, so it imposed trading restrictions, but in the following days it lifted the restrictions when sufficient funds were raised.
Tenev said that he had not anticipated a surge in customer volume before. Robinhood's users are mostly long-term traders, and only 2% of users are day traders.
Under the torture of members of Congress, Tenev apologized to all users for Robinhood's restrictions on transactions, and said that the company would learn a lesson to prevent such things from happening again.
The retail "leader" Keith Gill admitted that day that he had discussed the topic of short sellers on the Reddit forum website.
However, Gil said that he was only using public information to study the market, and at first he never thought that the share price of Game Station would soar to $483.
At present, the game station has fallen to more than 40 US dollars, he said that he will continue to see more.
Gabe Plotkin, chief information officer of hedge fund Melvin Capital, said that he believes that the main reason for the previous high share price of Game Station was option trading rather than short covering.
Plotkin also mentioned that he had received a lot of information from Reddit users, some people said that he would cause pain to Jewish investors, including him.
In this regard, Reddit CEO Steve Hoffman said that his team only found a similar comment and immediately deleted it.
That day, the hearing called "The game stopped? When short sellers, social media, and retail investors collide with each other, who wins and who loses" lasted more than 5 hours.
In the meantime, Ken Griffin, the founder of hedge fund Citadel, was criticized for wasting time by Democratic Congressman Brad Sherman for avoiding multiple questions and not answering directly.
As to whether short-selling behavior needs to be strengthened, many lawmakers expressed support.
At the end of the hearing, the Chairman of the Financial Services Commission Maxine Waters stated that the main purpose of the hearing was to find out the facts so as to help regulators consider possible measures to protect investors’ rights and ensure the credibility of Wall Street. .
"The Wall Street Journal" stated that this is only the first in a series of hearings on Game Station. Regulators such as the US Securities and Exchange Commission will also conduct more investigations into the incident.
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