UPDATED 7:32 AM PT – Friday, February 19, 2021
The GameStop hearing on Capitol Hill was a chance for elective leaders to challenge Wall Street hedge funds on the ethics of taking large short positions on struggling stocks.
However, viewers of the highly anticipated hearing were left with plenty of questions and few answers. In fact, the only clear answer from Thursday’s hearing was the majority of politicians on Capitol Hill seem to favor the elites on Wall Street over working class Americans.
The hearing began with witness testimonies. Robinhood CEO Vlad Tenev said his company did not halt the purchasing of GameStop stock because anyone had asked them to. He added, Robinhood does not answer to any hedge funds or market makers.
However, Tenev later admitted that Citadel, one of the world’s largest market makers on Wall Street, is actually their biggest trading partner. It was also revealed that hedge fund Melvin Capital was never actually bailed out when it received a $2 billion cash injection from Citadel following massive losses on their GameStop shorts.
At least one person who found this hard to believe was Barstool Sports President Dave Portnoy. He said he believed a clear double standard was being revealed.
“It sucks for Melvin, but you got beat, you got beat and and there’s plenty of financial companies who have made money by taking advantage of the system, inventing something new and becoming billionaires,” Portnoy stated. “But when you get beat, you get beat…that’s being in the game.”
While committee members seemed to completely dismiss the idea that Melvin Capital and other hedge funds conducted an illegal naked short on GameStop, one person who did receive intense questioning was a man named Keith Gill.
Better known by his YouTube name Roaring Kitty, Gill was one of the first Wall Street bets users to float the idea of purchasing shares in GameStop. In 2019, he released an extensive theory as to why GameStop was undervalued while using various forms of publicly available information to reach his conclusion.
“I support the right of individuals to send a message based on how they invest,” Gill stated. “As for me, I like the stock…I’m as bullish as I’ve ever been for a turnaround for GameStop and I remain invested in the company.”
During the hearing, however, lawmakers seemed to continually insinuate he had actually performed an illegal market manipulation by convincing people on the internet to drive up the price of GameStop. Lawmakers on both sides are now deflecting the issue away from predatory hedge funds.
Republicans now want less regulation, so liquidity problems can’t keep the platform from placing restrictions on stocks. Meanwhile, Democrats want more regulation on Robinhood because they believe working class retail traders aren’t smart enough to invest their own money.
Regardless, the American people will have to wait and see if the federal government decides to prosecute predatory hedge funds on Wall Street, instead of deflecting blame towards working class Americans like Keith Gill.