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Julia La Roche from Yahoo Finance joined Yahoo Finance Live to discuss Elon Musk grilling the CEO of Robinhood on the Clubhouse audio app.
Video transcript
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ADAM SHAPIRO: We’ve talked a lot about GameStop and the phenomenon of retail investors’ ability to resist big bucks. Julia La Roche knows a lot of people on both sides of this equation. We’re bringing it into the flow, because even Elon Musk is grilling Robinhood. What do you have for us, Julia?
JULIA LA ROCHE: Well, last night – sure, if you’ve heard of Clubhouse, this is the – it’s the voice chat app that’s all the rage right now in Silicon Valley. Elon Musk joined one of these rooms last night, and it was essentially a crowded house, so full that there were overflow rooms. You’ve seen some of these feeds leaking online.
And the real surprise was at the very end, Elon said, like, hey, do you want to hear the CEO of Robinhood explain what really happened? That’s how they kind of started this conversation. And he was basically like, hey, man, spill the beans, like what really happened? And he roasted it around things like – like it’s fishy? So for 14 minutes the Robinhood CEO had to explain exactly what had happened, especially with the clearinghouse side of the equation.
So some of the things that happened during that conversation was that Vlad Tenev, who by the way was on our airwaves on Friday just to explain a lot of stuff to start with, was sharing with Elon Musk that he – look, he got That message at 3:30 a.m. PT on Thursday from the operations team at the National Securities Clearing Corporation that they were to put $ 3 billion on deposit. But in the end, he had negotiated that up to $ 700 million.
But yeah, basically he kept going – Musk kept squeezing him like, look, all that – well you saw the order flow and there’s something fishy going on here, in which he refuted a lot of that. conspiracy theories circulating. But really fascinating conversation. We talked about it to really capture the popular vibe. And here you have a major CEO, the richest man in the world, also someone who criticized short selling, toasting the CEO of Robinhood.
SEANA SMITH: Yeah, Julia, there are so many interesting lines coming out of this discussion. The only thing that struck me, and you mentioned it in your article, was to kind of refute what you were saying with the National Security and Clearing Corporation, the NSCC, Musk kind of asked who was controlling it. or who was behind. . And Tenev actually stood up for the group’s action, which hit me and I thought it was … I don’t know if I would necessarily say it was surprising, but kinda got me caught off guard.
JULIA LA ROCHE: Yeah, it’s interesting because I think – I was trying to lean into it. It is in a way a quasi-autonomous governance body. You have them in finance. And he was like, look, their was a reasonable request to – from the NSCC.
But he was also … Musk was saying, well, you know, if it’s not really a government regulatory agency, but it’s also a consortium, like who’s in it? Who can be part of it? But it’s not clear at this point. And he kind of said to Musk, look, you’re going into these conspiracy theories floating out there. Seana.
ADAM SHAPIRO: In fact, it is Adam. Julia La Roche, thank you very much, evacuated …
JULIA LA ROCHE: Adam.
ADAM SHAPIRO: – a blizzard here in Manhattan, enjoying the sunny shores of South Florida. We’re not finished, however, talking about what’s going on with GameStop. And we heard a lot about it earlier today. Chester Spatt, former chief economist for the SEC, joined Yahoo Finance Live to discuss how the SEC and regulators should respond to Robinhood and other stock applications restricting trading for certain stocks.
CHESTER SPATT: Well, the SEC indicated late last week that it was monitoring developments. And I think that’s extremely important in the current situation. Some of the issues that you just discussed, namely the capital requirements of – of Robinhood and necessity – and the possible necessity of the trading limits that they imposed are certainly something that board staff should be on top of, understand why – what was the nature of the capital before this happened to Robinhood? Was it insufficient capital – capitalized?
What do the restrictions they imposed mean, for example, restricting – I don’t know if I understand correctly, but restricting the game – the stock of games to one share. What kind of cause – what kind of cause this particular restriction? I think all of this is important to understand. And the regulator, at the same time, you know, may be interested in whether the Redditors have manipulated the markets to produce an artificial price. It seems to me that all the questions are on the table.
But these are issues for the staff, for them to explore. At this point, they don’t seem to me to rise to the level of lawmakers who are already trying to do an autopsy. I think we need to let the SEC staff do an autopsy first. And it is only later that lawmakers can – lawmakers should debate possible changes to the regulatory framework. Let’s look first at what our regulatory framework did, why did it do it, and to what extent were the actions of market players appropriate?
MYLES ABROAD: And you know, Chester, you raised the issue of market manipulation. I would love if you could perhaps briefly describe how the SEC attempts to define when a security has been manipulated. Because I think there may be a popular misconception that discussing a specific stock is manipulation of that stock.
CHESTER SPATT: Well, I certainly don’t think – I certainly wouldn’t – wouldn’t think that discussing a particular stock would be manipulation. It has been difficult – it is a difficult question for the commission to define. I think of manipulation in terms of attempts to create an artificial price. But I don’t … I don’t just think of communication, for example, that this title is undervalued because there is a potential to do a short squeeze.
Originally published
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