On Thursday, the Chief Executive of Californian online trading platform Robinhood, social networking site Reddit, Wall Street hedge fund managers alongside an influential YouTube streamer widely known as Roaring Kitty, had faced off a flurry of fierce criticisms in a hearing on the US Congress over a Reddit stock trading discussion group-led retailers’ buying-frenzy last month that led to an ominous battle between the Wall Street’s institutional investors and Main Street traders alongside a sky-scrapping rally in the shares’ prices of GameStop Corp., AMC and others.
In point of fact, a number of hedge funds were heavily glued up their short-selling positions on GameStop shares later last month, however, a retail traders’ buying frenzy that reportedly was caused by a Reddit social media group, surged GameStop shares’ prices as much as 323.23 per cent to $325 apiece between January 25-29, causing lethal damages to a deluge of hedge funds which had been looking to short-sell GameStop shares and forcing Wall Street to wrap up that week more than 2 per cent lower as hedge funds were reportedly dumping a raft of long-buy positions in order to cover up GameStop losses.
Nonetheless, in the following week when Robinhood had inclined a ban on trading of GameStop stocks, shares’ prices of the gaming retailer nosedived dramatically close to their opening price of $39 per share, inflicting deeper wounds into Main Street traders who had betted heavily on GameStop shares during their peak a week earlier.
Robinhood grilled in Congress on whether it picked a side in Reddit rally
Latest hearing in the US Congress that drew in some of the most powerful players in the Wall Street such as billionaire Republican Citadel CEO Ken Griffin, Robinhood CEO Vlad Tenev, Reddit CEO Steve Huffman and Keith Gill alongside a YouTube streamer known as Roaring Kitty, who were charged with promoting investments in Gamestop, came forth as US lawmakers were probing on how tens of thousands of Reddit users could swamp on a buying-position in GameStop shares that forced deep-pocket hedge funds to bow down and stomach heavy losses.
Meanwhile, as the defenders were burnishing their consumer protection credentials in a fiery Congress hearing that featured loud echoes, background noises and feedbacks with Tenev and Griffin both facing off harsh scolding, questions were raised whether the trading platforms were picking a side while deciding to halt GameStop shares’ trading on January 28.
Nonetheless, adding no hedge funds had influenced Robinhood Chief Tenev’s decision and the situation could have been “significantly worse,” had it not cancelled buying, Robinhood Chief said, “I’m sorry for what happened.
I apologize. I’m not going to say that Robinhood did everything perfect,” pledging the fintech start-up would not make the same mistake again. Besides, Roaring Kitty said on his defence, “I am just an individual whose investment in GameStop and posts on social media were based upon my own research and analysis.,” though behind him there was a poster of a ‘Kitten’ with a caption “Hang in there!
”, which more likely targeted thousands of GameStop buyers who had been met with steep losses after making purchases at the height of the rally, hinting that the Reddit social media led ‘buying’ attacks on hedge funds which usually short-sell a swathe of company’s shares on a regular basis, might again make their rumbling presences known in a near term.