- Robinhood CEO Vlad Tenev stated the assets of his platform’s users have jointly grown by more than $35 billion.
- Tenev was challenged on this point by lawmakers, who asked how that would compare if users invested their money differently.
- The CEO on Thursday defended the platform he established in 2013 from legislators in a five-hour congressional hearing.
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Robinhood Markets CEO Vlad Tenev said in his statement prior to Congress today that the properties of his platform’s users have actually collectively grown by more than $35 billion.
Tenev on Thursday defended the platform he founded in 2013 from lawmakers during the five-hour hearing in front of the House Financial Solutions Committee. It was the first of 3 prepared hearings, which intend to investigate the primary players at the center of the GameStop drama in January.
Rep. Jim Himes, a previous Goldman Sachs banker, was not so convinced with Tenev’s claim. He argued that if Robinhood would not expose just how much its customers invested on the trading platform, then it would not be possible to calculate the return on their financial investments.
” You threw out the number of $35 billion,” Himes stated. “I actually believe the ideal comparison is: What if your clients had merely purchased an S&P 500 index fund? Would that number be more than $35 billion, or less?”.
But Tenev said that the agent was making the wrong comparison.
” Congressman, with regard, I do not think the right comparison is buying an S&P 500 index fund,” the Robinhood CEO said. “I believe the ideal contrast is not having actually invested at all and having instead invested that cash.”
When pushed, this time, by Rep. David Kustoff, on the business’s questionable payment for order flow design, where consumers’ trades are directed to third parties for execution, Tenev admitted that it was certainly Robinhood’s largest source of income.
Rep. Maxine Waters followed up with the exact same concern on whether whose best interest it was that Robinhood was offering clients’ trades, which Tenev mostly avoided. Robinhood in December paid a $65 million penalty in December 2020 for “deceptive” interactions with clients around its payment for order flow practices.
The hearing inspected occasions that happened in January, when day traders organizing on Reddit increased the share rate of GameStop, initiating a “short-squeeze” on hedge funds that had been wagering versus the video game seller..
Others summoned to Washington to affirm included Citadel primary executive Ken Griffin, Melvin Capital hedge-fund supervisor Gabe Plotkin, and Keith Gill, likewise known as Roaring Kitty, among others.
Representatives blamed Robinhood for stopping working to secure retail investors.
” There is an inherent tension in your service design in between equalizing financing, which is an honorable calling, and being an avenue to feed fish to sharks,” Rep. Sean Casten stated.
” If we have actually learned anything from the past couple of weeks, it’s that these average, daily investors are pretty darn sophisticated,” Mr. McHenry stated.