Wall Street, Silicon Valley, rogue internet chatrooms and Congress collided Thursday in a hearing to dissect what went down during the recent skyrocketing rally of GameStop and other stocks.
The virtual hearing of the House Financial Services Committee was called after shares of GameStop, AMC and other stocks favored by online traders surged late last month on the back of a “short squeeze” strategy that made early investors millions of dollars on paper, while hedge funds that bet against them lost billions.
Many of the retail investors used the zero-commission trading app Robinhood to execute their trades — but they
The recent astronomical rise of meme stocks brought many people to the stock market for the first time, typically through Robinhood, the commission-free stock trading app that has promised to democratize access to the stock market. According to a number of financial advisers, the app appears to be democratizing certain types of risky investing, like day trading. There are potentially less risky — and equally user-friendly — app options out there.
The thing is, it’s impossible to predict the market. Many professionals spend their entire careers trying to do so, with varying levels of success. And regular people who invest
Frenzied trading in the shares of GameStop and other companies will be the subject of what is expected to be a fiery hearing in Congress on Thursday, when US politicians get their first chance to quiz executives from the trading app Robinhood, Reddit and other players in the saga.
The House financial services committee will hold a hearing at noon in a first step to untangling the furore surrounding trading in GameStop, AMC cinemas and other companies whose share values soared to astronomical levels as small investors piled into the stocks.
The hearing, titled Game Stopped? Who Wins and Loses
The family of a 20-year-old user of the stock trading app Robinhood sued the company Monday, alleging that its “aggressive tactics” and targeting of young, inexperienced investors led to the user’s death by suicide last year.
In a 30-page complaint filed in California’s Santa Clara County Superior Court, the family of Alex Kearns cited his last known written words — “How was a 20-year-old with no income able to get assigned almost $1 million worth of leverage?” — and said the Silicon Valley-based company lures users like Kearns into taking big risks with the promise of big profits.
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