GameStop key players tell US lawmakers no manipulation

ABS-CBN News

Posted at Feb 19 2021 08:20 AM

GameStop key players tell US lawmakers no manipulation 1
Keith Gill, an individual online investor in GameStop, testifies during an entirely virtual hearing of the US House of Representatives Committee on Financial Services entitled “Game Stopped? Who Wins and Loses When Short Sellers, Social Media, and Retail Investors Collide?”, in Washington, US, February 18, 2021. House Committee on Financial Services/Handout via Reuters

SAN FRANCISCO, United States - Key players involved in the trading frenzy centered on GameStop shares told skeptical US lawmakers on Thursday that their actions were above board and in line with ordinary stock market business.

Founders of free stock-trading app Robinhood and online forum Reddit were among those to testify at a House of Representatives financial services committee hearing.

Unprecedented recent volatility -- with moves of up to 400 percent for shares in the GameStop video game store -- prompted calls for regulators to review the role of social media, hedge funds and trading platforms which some allege manipulate the market.

The situation has pitted Wall Street's hedge funds, which often take "short" positions on shares they sees as likely to fall, against a social media-driven move to "squeeze" big institutional investors.

"I am not trying to throw anyone under the bus," Robinhood co-founder and chief executive Vlad Tenev said as he was barraged with questions during a virtual hearing held in online video format.

"All I can say is Robinhood played it by the books."

Keith Gill, an amateur investor renowned at Reddit's WallStreetBets forum for snapping up GameStop shares early and cheap, testified that he bucked market wisdom based on his own research and not because he was out to rattle hedge funds.

'Significant losses'

"The idea that I used social media to promote GameStop stock to unwitting investors and influence the market is preposterous," said Gill.

"When I wrote and spoke about GameStop and social media with other individual investors, our conversations were no different from people in a bar or in a golf course, or at home talking or arguing about a stock."

YouTube star Gill, one of the traders at the center of the mania, told lawmakers he grew up playing video games and still believes GameStop "has the potential to reinvent itself as the ultimate destination for gamers."

Gill, known as Roaring Kitty online, also denied manipulation at the hearing, which was titled "Game Stopped? Who Wins and Loses When Short Sellers, Social Media, and Retail Investors Collide."

Gabriel Plotkin, founder and chief investment officer at Melvin Capital Management, said in his testimony that the fund did not manipulate trading.

He added that Melvin abandoned its short positions on GameStop with "significant losses" when the shares jumped $17 to a peak of $483.

Plotkin contended people on Reddit forums were encouraging trade in GameStop as a way to punish the hedge fund and that "many of these posts were laced with antisemitic slurs directed at me and others."

US Treasury Secretary Janet Yellen has said that officials would be "looking carefully" at the market volatility that came after a social-media-fueled buying frenzy for stocks that were shorted by hedge funds, including of GameStop.

The wave of buying boosted the share price of struggling companies, including GameStop and movie theater brand AMC Entertainment.

But the share prices fell sharply when the frenzy subsided.

The events led to some retail investor apps such as Robinhood -- which says its goal is to "democratize finance for all" -- to limit trading in some of the most volatile stocks last week, drawing the ire of critics.

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