House Financial Services chairman Maxine Waters, D-Calif., And other Democrats vow to examine what role Wall Street hedge funds may have played in stopping trading.
Robinhood, which has grown rapidly as a user-friendly platform for individual stock traders, claims to restrict trading to meeting financial obligations sparked by the surge in trading.
“I’m concerned about whether or not Robinhood has restricted trading because of an arrangement between Robinhood and some of the hedge funds involved,” Waters said on MSNBC this weekend.
It wasn’t clear if Democrats would ask other financial institutions for testimony. Democratic lawmakers are also examining the role of billionaire Ken Griffin firms. The two companies – hedge fund Citadel and trading company Citadel Securities – declined responsibility for a broker’s decision to suspend trading. Citadel bailed out a hedge fund that suffered from GameStop’s stock appreciation, and Citadel Securities is paying Robinhood to run its stock deals.
Rep. Al Green, D-Texas, chairman of the Financial Services Oversight Subcommittee, focuses on Citadel’s role in the GameStop saga. He said Monday he wanted to know “if there is anything about this relationship that caused Robinhood to act, or whether Robinhood acted for reasons related to its liquidity.”
Robinhood declined to comment on the hearing. A Waters spokesman did not respond to a request for comment.