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Patrick McHenry opening with arguing that retail investors are a lot smarter than people give them credit for. "There's wisdom in the crowd."
For arguijng this is just a fact-finding mission, McHenry is spending a lot of time pontificating about accredited investor classification. Obvs coached as this entrenching inequality, rather than the blatant finance industry water-carrying it really represents.
Maxine Waters now mixing up Citadel the hedge fund and Citadel Securities the market-maker. Would pay good money to the reaction of their PRs.
Waters getting interrupted by an aide saying that speakers only have three mins for opening statements. BOOOO. We want more!
Rep Brad Sherman saying "we need to look at the gamification and glorification of high-frequency trading", in one line underscoring why hearings by politicians is an AWFUL way of tackling these subjects.
Plotkin forgot to unmute himself when swearing in.
Waters interrupted Robinhood's Vlad Tenev's lengthy personal statement (already online) to tell him to just focus on what happened in January. Someone else then interrupts her to say he can say whatever he wants in the opening statements, and Tenev continuing.
Here is the statement if anyone is interested. https://financialservices.house.gov/uploadedfiles/hhrg-117-ba00-wstate-tenevv-20210218.pdf
Love that several people on the line still haven't learned how to use the mute button, 12 months into the pandemic lockdowns.
Ken Griffin now up. Also just sticking to his prepared statement, which went online late yesterday. https://financialservices.house.gov/uploadedfiles/hhrg-117-ba00-wstate-griffink-20210218.pdf
Since I promised @jgrovum some memes.
Gabe Plotkin's video has strong hostage video vibes
I get why people appearing want to humanise themselves, but Plotkin, how is it at all relevant that you didnt immediately have a job coming out of college, are now married and have four kids?
Shorter Griffin/Tenev.
Reddit's Huffman says the people "WallStreetBets banded together at first to seize an investment opportunity not usually
accessible to retail investors". What, buying stocks and option in a well-known, publicly listed company...?
accessible to retail investors". What, buying stocks and option in a well-known, publicly listed company...?
GILL GILL GILL
The "hang in there" cat poster and red bandanna is a good touch.
Keith Gill. "I am not a cat."
Here is Keith Gill aka Roaring Kitty aka DeepFuckingValue's prepared statement, which, aside from the "I am not a cat" line, he is sticking fairly closely to. https://financialservices.house.gov/uploadedfiles/hhrg-117-ba00-wstate-gillk-20210218.pdf
One thing that is entirely missing from his explanation for his GameStop investment thesis is whether a short-squeeze and gamma squeeze was part of it. Explainer here: https://www.ft.com/content/47e3eaad-e087-4250-97fd-e428bac4b5e9
Cato Institute's Jennifer Schulp - a former FINRA enforcement director - now talking. For an idea of her views, here is a piece she wrote in December titled "Retail Investors Are Revolutionizing the Stock Market. So Stop Calling Them ‘Dumb Money.’" https://www.cato.org/commentary/retail-investors-are-revolutionizing-stock-market-so-stop-calling-them-dumb-money
Anyone else doing @felixsalmon's drinking game?
Waters playing the yes or no game with Tenev.
Maxine Waters really laying into Griffin and Citadel, accusing it of driving money off exchange to scalp it. Griffin looks non-plussed by her yes-no question (on what % of retail flow CitSec executes) and then passes word to McHenry.
McHenry actually asking a question, which is a nice pace of change.
But its obviously a bit dumb, and he can't resist attacking the "iniquitous regulations that folks in DC have imposed".
Carolyn Maloney raising the dark side of retail trading, specifically the tragic suicide of Alex Kearns (which we wrote about here and is free to read https://www.ft.com/content/45d0a047-360f-4abf-86ee-108f436015a1)
Maloney meandering a little, but has actually read RobinHood's T&Cs, and asking about whether RH did enough to clarify them.
Tenev "I'm not going to say we did everything perfectly... but I can promise we can learn from it and make sure that it will never happen again."
Maloney quite rightly pointing out that trading restrictions came out of the blue, and weren't well-communicated. Ie the WHY they did it. If RH had handled it better we might not even have had this hearing.
Vlad Tenev saying this was a "five sigma event" in explaining away RH's inadequate capital.
Btw, the FT is also doing a proper live blog of the hearing here, if someone wants something more thought-out than my probably inane observations. https://www.ft.com/content/c219df22-0d93-34d7-a729-5a7928abb460
Jennifer Schulp arguing out that regulations, collateral requirements, markets etc all pretty much worked as they should. Which probably should be the big takeaway from this, but almost certainly won't be.
Sherman angrily asking Ken Griffin about whether a Fidelity or RH order is treated differently, "best execution" or "enhanced best execution".
Sherman to Griffin. "You are doing a great job wasting my time. If you want to filibuster you should run for the Senate."
A shame really. I wish Sherman could have let Griffin actually try to answer it, and then afterwards decide whether it was mere prevarication, rather than interrupt the answer saying its not being answered.
HAHA. Someone off screen interrupted Ken Griffin with a shout of "WHO THE HELL ARE YOU AND WHAT ARE YOU DOING" (i think).
Obviously the questions probably should probably all go to RobinHood and Citadel, but interesting that no one has asked @TheRoaringKitty a single thing yet.
Vlad Tenev: "Our rules on margin is more restrictive than our competitors, because you have to be a RobinHood Gold member and pay $5 a month."
Huffman and Gill rn
Rep Huizenga casting shade on Sherman "filibustering himself" and returning to ask Griffin more about PFOF.
Huizenga rightly pointing out that the reason everyone is there is "political theatre".
Now he's asking everyone whether retail investors are actually investors, basically. Naturally everyone loves retail money at the party. Gill chimed in at the end after forgetting he was on mute.
Keith Gill says he still thinks GameStock is a buy. Diamond hands!
Notable that he's stopped posting screenshots of his E*Trade account though...
Rep Velazquez asking about disclosure. IMHO better disclosure is a complete red herring.
Velazquez asking the first question about short-selling!
Saying she first saw it against the people of Puerto Rico.... I'm not sure she actually knows what short-selling is?
Plotkin dodging defending short-selling, just saying that if rules change then Melvin will follow them.
Waters now bridling at the accusation that this is all just political theatre.
Gill: "increased transparency (around market guts and innards) would help" retail investors.
Rep Blaine Luetkemeyer asking about GameStop's short interest being over 100% and questioning whether this was market-manipulation. Plotkin being really mute on it, basically saying he wasnt naked shorting so within regs.
Neither Griffin nor Plotkin actually addressed Luetkemeyer's question of how one can get a short interest of over 100% with no nefariousness going on.
If I had "I appreciate the question" on my GameStop hearing drinking card I'd be getting pumped at the hospital now.
Rep David Scott asking Tenev whether they check that traders actually do proper work or are just pumped by social media. Scott is very long on strong opinions and short of knowledge, IMO.
Scott saying this exposes a "serious threat" to the financial system, as social media can move stocks more than fundamentals. "This is enormous," he argues.
Interesting. Rep Stivers asking Plotkin about whether Musk tweeting "GameStonk" might have been Musk retaliating against shorts like Melvin. Plotkin saying Melvin has been short Tesla in the past but wont be drawn.
Suspect that Musk had no particular beef with Melvin, but clearly he has a well-known hatred for shorts in general and has long argued that shorting should be illegal.
Also starting to suspect that this entire hearing is a publicity stunt for Clubhouse.
"Clubhouse - Even At Our Worst, We Are MUCH Better Than US Congress."
Rep Andy Barr asking some decent* questions of Ken Griffin and letting him answer.
*Decent by the standards of the hearing
*Decent by the standards of the hearing
Though tbf Barr used the phrase "wholesaler" in a way that suggested he actually knew what it meant.
