Robinhood CEO Vlad Tenev said the investment app could have explained more clearly why it had to block GameStop trades and other actions during the reddit-fueled market frenzy last month.
“I think the challenge was that, without a doubt, we could have communicated this a little better to customers,” said Tenev in a recent episode of the podcast “All-In” with a focus on funding.
The admission came before Tenev’s appearance at a Congressional hearing on Thursday, where lawmakers will probe the unprecedented rise in GameStop’s share price in January.
Robinhood’s decision to temporarily block traders from buying GameStop and others
“Meme actions,” like the AMC Entertainment movie network, generated widespread outrage amid a populist market insurrection led by Reddit’s WallStreetBets forum. The message board had been pumping those stocks in an effort to squeeze the hedge funds that were betting against them.
Robinhood communicated the change to its users via automated emails that simply said they were prohibited from buying certain shares, according to Tenev.
He said the messages should contain more information to avoid claims that Robinhood was acting on behalf of hedge funds that were suffering from the explosion of GameStop’s shares. Tenev denied that any hedge funds played a role in the company’s decision to limit trading.
“As soon as these emails were sent, conspiracy theories immediately started to arrive, so my phone was exploding with, ‘How could you do that, how could you be on the side of the hedge funds?'” Tenev said Friday – episode of the podcast, whose hosts include venture capitalist Chamath Palihapitiya and Robinhood investor Jason Calacanis.
“We could probably have offered more details about this with the prediction that perhaps customers would think that a hedge fund forced us to do this or something,” he added.
As he revealed for the first time this month, Tenev said Robinhood had to restrict trading because a Wall Street clearinghouse called the National Securities Clearing Corporation asked the company for a deposit of about $ 3 billion amid huge demand for shares from GameStop.
Tenev is scheduled to appear at the House Financial Services Committee hearing on Thursday alongside Citadel chief Ken Griffin, Reddit CEO Steve Huffman and Keith Gill, the Reddit user who was credited with triggering the GameStop rally .