With the decision to completely suspend trading in this and other small stocks in the middle of the height of the Gamestop rally , Robinhood has caused massive annoyance in its 13 million user base.
Robinhood: Cancellation of the Gamestop rally annoys millions
Due to the suspension of trading, the share price had collapsed. One can speak of the turning point in the Gamestop rally. Not only had customers of the trader app loudly announced their displeasure, the greats of US politics also sharply criticized Robinhood. In Texas, the prosecution stepped in and spoke of corruption.
There is a hearing in the US Congress on Thursday scheduled to discuss what went on around the trading suspension and the Gamestop rally in general. In addition to Robinhood representatives, representatives of the clearing house Citadel Securities, the hedge fund Melvin Capital and the Reddit platform, through whose community Wallstreetbets the buying and selling campaigns were allegedly coordinated, were invited. The Youtuber Roaring Kitty must also appear, to whom a significant proportion of the processes are also attributed.
Tenev feels safer in the hotel than at home
Some users are only moderately interested in all of this. For them Tenev has become a traitor, and they have renamed his company Robbinghood (robbing, to rob). A few days ago, angry protesters had thrown dog excrement at the Robinhood seat and sawed off a statue in front of the building.
As Bloomberg reports, Tenev takes the death threats against him so seriously that he has avoided going home for days. Instead, he should stay in a hotel to wait for the wave of anger to subside.
Be next to Tenev institutional investors also face death threats. The angry retail investors accuse Robinhood and the institutional investors of having hindered free competition in a coordinated manner by suspending trading in an illegal manner and with the intent to secure their benefices.
Tenev puts the blame on the clearing house
In a conversation with Elon Musk at Clubhouse, Robinhood boss Tenev tried to put the events that led to the suspension of trading into perspective. However, that opened up more questions than answers.
According to this, the clearing house that handles the transactions for Robinhood actually settled, in the early morning before the suspension of trading, a significant increase in the collateral was ultimately demanded. At three billion US dollars, this amount was many times higher than typically usual and even exceeded the company’s total financing (two billion).
With the decision to restrict trading, the clearing house, which is operated by Citadel Securities, a subsidiary of the Citadel hedge fund, negotiated a deposit of $ 700 million.
There should be some questions to be answered in the Congressional Hearing. Including whether the clearing house could have abused its market power in order to force Robinhood to behave in a desirable manner.
The post Gamestop and the consequences: Robinhood boss Tenev stays at the hotel because of death threats appeared first on World Weekly News.