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Robinhood, Melvin Capital, Citadel executives expected to testify in Congress on GameStop turmoil: sources

Published 02/10/2021, 11:08 AM
Updated 02/10/2021, 11:10 AM
© Reuters. A 3d printed Robinhood logo is seen in front of displayed GameStop logo in this illustration

© Reuters. A 3d printed Robinhood logo is seen in front of displayed GameStop logo in this illustration

By Svea Herbst-Bayliss and Pete Schroeder

(Reuters) - Executives from Robinhood, Melvin Capital and Citadel Securities are expected to testify before a House panel at a Feb. 18 hearing exploring trading turmoil in GameStop Corp (NYSE:GME) and related stocks, said two sources familiar with the matter.

The House Financial Services Committee is examining how an apparent flood of retail trading drove certain stocks to extreme highs, squeezing hedge funds like Melvin that had bet against those shares.

A committee spokesman did not respond to a request for comment, and a full witness list for the hearing has yet to be made public. Spokespeople for the companies declined to comment.

The hearing is the first of what could be several Washington-driven probes into what happened in the stock market to kick off 2021.

The three companies have been at the center of the GameStop saga. Robinhood emerged as both a popular and accessible retail trading platform, but drew criticism during the frenzy after it temporarily handcuffed trading in GameStop and other viral stocks as the firm tapped credit lines.

Robinhood's commission-free trading model also put a spotlight on Citadel Securities, which accounts for over 20% of all U.S. equities volume and roughly 39% of all U.S.-listed retail volume, according to its website. Citadel Securities' heft has raised questions over the company’s market power, including business arrangements where the company and competitors pay brokers like Robinhood for order flow.

© Reuters. A 3d printed Robinhood logo is seen in front of displayed GameStop logo in this illustration

The GameStop surge resulted in massive losses for Melvin Capital, after the hedge fund bet the retailer’s stock price would tumble. The fund, founded by Gabe Plotkin in 2014, began the year with $12.5 billion in assets but lost 53% in January as retail traders ganged up on hedge funds.

Latest comments

EU, Mexivo, USA, CANADA...When UN meets next time, and takes the pot off the list of old rules..and then, it is gonna rocket like a ten Saturn 5's🙃.
pot is still down over 80% over all from the numbers in 2017-18. Now the world is ready, and T*ump is gone.
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GME 4 life gangsta haha
Can you watch those in the internet?
You probably can't because if you could it would even be more blatantly clear how corrupt Wall Street is. I'm not hoping for this to change much (I could only wish), but at least I hope this can show how corrupt hedge-funds are and by correlation, Wall Street.
I'm looking forward to these hearings further exposing the hypocrisy of politicians and the media.
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