Democrats attack Robinhood for its halt to GameStop trading – By Caitlin Reilly (Roll Call) / Feb 18 2021
Maloney rebukes mobile trading app for ‘arbitrary’ action
Lawmakers grilled Robinhood Markets CEO Vlad Tenev about the company’s decision to pause purchases in GameStop Corp. stock and Robinhood’s business model, including payments it receives for routing customer trades.
Tenev and others appeared before the House Financial Services Committee Thursday at a hearing on why GameStop shares jumped from about $20 a share to more than $400 last month as retail investors organized online to buy up the stock.
“None of this is healthy for our markets or good for investors,” Rep. Carolyn B. Maloney, D-N.Y., said. “What makes markets work fairly is when everyone knows the rules and that the rules remain consistent and predictable and are enforced. But because of Robinhood’s actions, too many customers did not get that predictability.”
Robinhood, a mobile trading app, on Jan. 28 paused purchases of GameStop and other volatile shares, citing rising deposit requirements from its clearinghouse, the National Securities Clearing Corp. The clearinghouse, which ensures stock trades are executed properly even when there’s a default, informed the company it owed about $3 billion in margin — 10 times the deposit requirement just three days before, Tenev said during the hearing.
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