The GameStop hearing certainly drew a lot of attention.
Key players involved in the GameStop saga were in the hot seat on Thursday as lawmakers grilled the CEOs of hedge fund Melvin Capital Management, financial firm Citadel, and trading app Robinhood, as well as the retail trader that started it all, Keith Gill (a.k.a, “Roaring Kitty”) about their respective roles in the market frenzy.
To sum up: In a matter of days, GameStop, a beleaguered physical video game retailer, saw its stock soar triple digits to top at $483 per share on Jan. 28, before plunging from its highs, closing on Thursday at around $40. That rollercoaster run was largely fueled by retail traders chatting up the stock on online forums like Reddit (more specifically, the page r/WallStreetBets), creating a big short squeeze. Hedge funds like Melvin Capital Management, whose CEO, Gabe Plotkin, faced Congress on Thursday, took huge losses on short bets they’d made on GameStop, betting the stock would fall.
Many of those traders used trading app Robinhood to make their orders. The millennial-favorite trading app faced backlash from social media, users, and lawmakers over its decision to restrict trading on certain stocks like GameStop and AMC in the midst of the frenzy. Robinhood later explained it made the decision because it had to maintain its “clearinghouse-mandated deposit requirements.”
The whole debacle prompted a Congressional hearing on Thursday. And as expected, Robinhood and one of its market makers, Citadel Securities, were especially grilled by lawmakers over their relationship, how Robinhood and Citadel make money from trades (hint: it’s a wonky acronym PFOF, or payment for order flow), and why Robinhood cut off the buying of stocks like GameStop temporarily.
Throughout the hearing, onlookers had plenty to say on social media. Despite the over five hours lawmakers spent questioning those summoned, however, one predominant take on Twitter was perhaps unsurprising for a Congressional hearing: Nothing really much came out of it.