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(Bloomberg) – Ken Griffin, the billionaire founder of Citadel, is expected to testify next week at a House hearing on the wild swings in GameStop Corp’s stock market. and other actions, according to three people familiar with the matter.
Robinhood Financial chief executive Vladimir Tenev is also expected to appear to be answering questions about the role the company’s popular online trading app has played in the uproar, the people said, asking not to be named before an official announcement. House Financial Services Committee chair Maxine Waters, a Democrat from California, said she wanted the panel to hear from hedge fund Melvin Capital Management as well.
Spokesmen for Citadel, Melvin Capital and Robinhood declined to comment. A spokeswoman for the House financial services committee did not respond to a request for comment.
Read more: What Citadel and Griffin have to do with GameStop
The hearing will give lawmakers their first chance to hear directly from the executives whose companies were at the center of a storm that rocked Wall Street and reverberated far beyond its floors. The frenzy, started by retail investors who flooded Reddit bulletin boards with bullish messages on GameStop, has sparked inquiries into possible market manipulation and calls for further consideration of mobile trading apps, short selling rules, creditworthiness of brokers and social media.
Rep. Patrick McHenry of North Carolina, the senior Republican on the Financial Services Committee, said it was important to know if laws were broken in addition to what created an atmosphere of market volatility. New Senate Banking Committee Chairman Sherrod Brown has also indicated he plans to hold a hearing on the matter, while fellow Democrat Elizabeth Warren asks Robinhood to explain why he has limited some GameStop transactions to the middle. volatility.
Robinhood, Citadel, and Melvin are all central actors in the drama. Most retail investors used the Robinhood platform to place their bets on GameStop before the brokerage blocked its customers from buying shares in the video game retailer. Warren said in his letter that Robinhood’s trading limits raise “troubling concerns about its relationships with the major financial institutions that execute its transactions, including Citadel Securities.
Griffin is a major Republican donor who controls one of the largest hedge funds in addition to Citadel Securities, the market maker that handles much of Robinhood’s transactions. Investment firm Citadel – an entity separate from the market maker – along with Griffin and others injected $ 2 billion into Melvin Capital, a hedge fund run by Gabe Plotkin that suffered heavy losses from its short bets against GameStop as the title climbed.
Citadel Securities executes about 39% of all average daily listed retail volume in the United States, according to its website. Robinhood has repeatedly stated that it is temporarily blocking customers from purchasing GameStop due to warranty claims, while Citadel has insisted it has no role in any actions taken by Robinhood.
Herds of individual traders whipped up GameStop, which started the year as a heavily traded stock market around $ 18 and climbed to $ 483 before falling back. The Securities and Exchange Commission is combing online publications for signs that the fraud has fueled the race, according to people familiar with the matter.
Lawmakers can ask about potential reforms to better protect the retail investors that fueled the rise. Some suffered losses, which raised concerns about taking risks that they did not understand or could not afford.
GameStop jumped 25% to $ 62.83 in New York on Wednesday, the most since February 5. The stock has plunged more than 80% since closing to a high of $ 347.51 on January 27.
(Updates to add additional background in the last five paragraphs)
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