- Robinhood CEO Vlad Tenev acknowledged the resources of his platform’s customers procure collectively grown by bigger than $35 billion.
- Tenev became once challenged on this level by lawmakers, who requested how that can maybe maybe maybe study if customers invested their cash in any other case.
- The CEO on Thursday defended the platform he based in 2013 from lawmakers in a 5-hour congressional listening to.
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Robinhood Markets CEO Vlad Tenev acknowledged in his testimony before Congress this week that the resources of his platform’s customers procure collectively grown by bigger than $35 billion.
Tenev on Thursday defended the platform he based in 2013 from lawmakers exact by device of the 5-hour listening to in entrance of the Dwelling Financial Products and companies Committee. It became once the first of three deliberate hearings, which goal to study the principle players on the heart of the GameStop drama in January.
Salvage. Jim Himes, a veteran Goldman Sachs banker, became once now not so satisfied with Tenev’s claim. He argued that if Robinhood wouldn’t affirm how indispensable its customers invested on the shopping and selling platform, then it wouldn’t be that you would possibly maybe maybe maybe be also believe to calculate the return on their investments.
“You threw out the quantity of $35 billion,” Himes acknowledged. “I in reality think the factual comparability is: What in case your customers had merely invested in an S&P 500 index fund? Would that quantity be bigger than $35 billion, or less?”
But Tenev acknowledged that the representative became once making the irascible comparability.
“Congressman, with respect, I don’t think the factual comparability is investing in an S&P 500 index fund,” the Robinhood CEO acknowledged. “I think the factual comparability is now not having invested in any respect and having as an change spent that cash.”
When pressed, this time, by Salvage. David Kustoff, on the corporate’s controversial rate for declare roam mannequin, whereby potentialities’ trades are directed to third parties for execution, Tenev admitted that it became once certainly Robinhood’s greatest provide of income.
Salvage. Maxine Waters adopted up with the identical quiz on whether or now not whose easiest passion it became once that Robinhood became once promoting potentialities’ trades, which Tenev largely refrained from. Robinhood in December paid a $65 million penalty in December 2020 for “deceptive” communications with potentialities around its rate for declare roam practices.
The listening to scrutinized events that took device in January, when day merchants organizing on Reddit drove up the portion stamp of GameStop, initiating a “brief-squeeze” on hedge funds that had been making a bet in opposition to the video game retailer.
The stock went on a dizzying climb, easiest for it to come crashing assist down following restrictions on the stock by Robinhood and completely different brokerages. The episode has drawn the eye of the Securities and Replace Rate and completely different regulators.
Others summoned to Washington to testify integrated Castle chief govt Ken Griffin, Melvin Capital hedge-fund supervisor Gabe Plotkin, and Keith Gill, furthermore is named Roaring Kitty, among others. Then again, most of the eye became once directed at Tenev, who bought intense questioning basically regarding Robinhood’s industry mannequin.
Representatives blamed Robinhood for failing to protect retail consumers. Some wondered whether or now not the commission-free feature ranges the playing discipline or leads to unsound market practices.
“There is an innate tension on your industry mannequin between democratizing finance, which is a noble calling, and being a conduit to feed fish to sharks,” Salvage. Sean Casten acknowledged.
Representatives from both parties agreed that brief promoting desires to be extra tightly regulated, or now not lower than extra clear.
“If we procure learned anything else from the past few weeks, it is that these practical, day after day consumers are lovely darn refined,” Mr. McHenry acknowledged.