House Financial Services President Maxine Waters (D-Calif.) And other Democrats are promising to investigate what role Wall Street hedge funds may have played in the move to halt negotiations.
Robinhood, which has grown rapidly as an easy-to-use platform for individual stock brokers, says it has limited trades to meet financial obligations triggered by the increase in trades.
“I am concerned whether or not Robinhood restricted trade because there was collusion between Robinhood and some of the hedge funds involved in this,” Waters said on MSNBC this weekend.
It was unclear whether Democrats would ask other financial institutions to testify. Democratic lawmakers are also examining the role of companies owned by billionaire Ken Griffin. The two companies – the hedge fund Citadel and trading company Citadel Securities – have denied any responsibility for any broker’s decision to suspend trading. Citadel saved a hedge fund that suffered from the increase in GameStop shares and Citadel Securities paid Robinhood to run its stock trades.
Congressman Al Green (D-Texas), who chairs the Financial Services Oversight Subcommittee, is focused on Citadel’s role in the GameStop saga. He said on Monday that he wants to know “whether or not there was something in this relationship that prompted Robinhood to act, or Robinhood acted for reasons associated with his liquidity.”
Robinhood declined to comment on the audience. A Waters spokesman did not respond to a request for comment.