Robinhood’s Vlad Tenev admits GameStop communication failure

Robinhood CEO Vlad Tenev said the investment app could have explained more clearly why it had to block transactions from GameStop and other stocks during the market frenzy fueled by Reddit last month.

“I think the challenge was that we probably could have communicated this to customers a little better,” Tenev said on a recent episode of the fundraising “All-In” podcast.

The admission preceded Tenev’s appearance at a congressional hearing Thursday in which lawmakers will investigate the unprecedented surge in GameStop’s share price in January.

Robinhood’s decision to temporarily block traders from buying GameStop and others
“Meme stocks” such as the movie chain AMC Entertainment have sparked widespread outrage amid a populist market insurgency led by Reddit’s WallStreetBets forum. The bulletin board had inflated these shares in an attempt to squeeze the hedge funds that bet against them.

Robinhood communicated this decision to its users with automated emails simply saying that they weren’t allowed to buy certain stocks, according to Tenev.

He said the posts should have contained more information to avoid allegations that Robinhood was acting at the behest of hedge funds that were affected by the explosion in GameStop shares. Tenev denied that hedge funds played a role in the firm’s decision to limit trading.

“As soon as these emails were sent, the conspiracy theories immediately started coming, so my phone exploded with, ‘How can you do that, how could you be on the hedge fund side? “Tenev said on Friday. episode of the podcast, which hosts include venture capitalist Chamath Palihapitiya and Robinhood investor Jason Calacanis.

“We probably could have provided more details on that with the foresight that clients might think a hedge fund forced us to do it or something like that,” he added.

As he first revealed earlier this month, Tenev said Robinhood had to restrict trading because a Wall Street clearinghouse, the National Securities Clearing Corporation, asked the company for a deposit of around $ 3 billion amid the massive demand for GameStop shares.

Tenev is expected to appear at the House Financial Services Committee hearing on Thursday alongside Citadel boss Ken Griffin, Reddit CEO Steve Huffman and Keith Gill, the Reddit user who has been credited with triggering the GameStop rally.