Finance Bigwigs, Tech Execs, and a Reddit Investor Testify on Capitol Hill

Billionaires, tech executives, and a YouTuber walk into a government hearing. 

The punchline is less funny than you’d hope. Yesterday’s virtual hearing, called by the House Financial Services Committee to better understand the astonishing surge in GameStop shares a few weeks ago, resembled a 9–3 football game in the rain—lots of defense and not particularly fun to watch. 

Still, it was perhaps the most high-profile discussion of an important development we’ve been charting for years: the growing influence of individual investors and social media in the stock market. And there were some interesting takeaways.

Tenev takes the heat: Many questions from lawmakers were directed at Vlad Tenev, CEO of Robinhood. The company limited trading of certain stocks and has been criticized for “gamifying” investing at the expense of the inexperienced investor. 

  • Tenev apologized for the pause in trading but otherwise defended his firm’s business model, which includes the controversial practice of “payment for order flow” (PFOF). 
  • Tenev and Ken Griffin, the billionaire founder of Citadel, both said that PFOF allows for innovation in the industry, such as the no-commission trades pioneered by Robinhood.

Roaring Kitty still loves GameStop: In his opening statement, Keith “Roaring Kitty” Gill, the trader who is credited with sparking major interest in the retailer, said, “In short, I like the stock.” 

  • When asked about new regulations to protect individual investors, Gill said he didn’t think any new rules were needed, just “increased transparency.” 
  • He also delivered the best line of the event (in our opinion) when he declared, “I am not a cat,” in reference to the viral video

Best of the rest: 

  • Reddit’s CEO said investment advice on the platform is “probably among the best.”   
  • Lawmakers argued among themselves whether the hearing was “political theater” or “serious oversight.”
  • Griffin denied conspiracy theories that Citadel and Robinhood colluded to limit trading in GameStop. 

Bottom line: Hedge fund manager Gabe Plotkin summed up the entire episode best when he said that his industry will have to adapt to the rise of the retail investor. 

+ Further reading (and listening):

  1. Get to know the five key witnesses at the hearing.
  2. Two Business Casual podcast episodes about GameStop. The guests are: 1) Jannick Malling, cofounder and co-CEO of investing social network Public and 2) Neal Freyman, who edits this newsletter every day and has been told he has a “podcast voice.”