Yahoo Finance’s Julia La Roche joined Yahoo Finance Live to talk about Elon Musk grilling Robinhood’s CEO on the Clubhouse audio app.
Video transcription
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ADAM SHAPIRO: We’ve talked a lot about GameStop and the phenomenon that retail investors can cope with a lot of money. Julia La Roche knows a lot of people on both sides of that equation. We’re getting her in the flow, because even Elon Musk is giving Robinhood a barbecue. What do you got for us, Julia?
JULIA LA ROCHE: Well, last night … of course, if you’ve heard about Clubhouse, it’s the … it’s the voice chat app currently trending in Silicon Valley. Elon Musk joined one of those rooms last night, and it was actually a full house, so full they had landing rooms. You have seen some of these streams leak online.
And the real surprise was at the very end, Elon said, say, do you want to hear from the Robinhood CEO what really happened? So that’s how they started this conversation. And he was basically like, hey, man, spill the beans, like what really happened? And he grilled him around things like … was this seedy? So for 14 minutes, the Robinhood CEO had to explain exactly what was happening, especially on the clearing house side.
So some of the things that came up during that conversation was that Vlad Tenev, who, by the way, was on our broadcast just on Friday and explained a lot of this to begin with, shared with Elon Musk that he … look, he got Thursday at 3:30 a.m. Pacific Time got this notice from their National Securities Clearing Corporation operations team that they needed to put $ 3 billion on deposit. But in the end he negotiated that up to $ 700 million.
But yeah, actually he kept … Musk kept pressuring him, see, the whole thing is going on … well, you saw the order flowing and there is something shady going on here where he has refuted much of this conspiracy. theories floating around. But really interesting conversation. We talked about really capturing the popular zeitgeist. And here you have a major CEO, the world’s richest man, also someone who criticizes short selling, which makes the Robinhood CEO have a whim.
SEANA SMITH: Yes, Julia, there are so many interesting lines coming out of this discussion. The only thing I noticed, and you mentioned this in your article, was that you just said what you just said with the National Security and Clearing Corporation, the NSCC, Musk asked who checked it or who was behind it. And Tenev actually defended the group’s action, which caught my eye and I thought, I don’t know if I would necessarily say it was surprising, but it kind of caught me off guard.
JULIA LA ROCHE: Yeah, it’s interesting because I think … I was trying to research this. It’s sort of, like a quasi-regulator itself, kind of a governing body. You have these in finance. And he was like, look, their request was reasonable from … from the NSCC.
But he was also … Musk said, well, you know, if it’s not really a government regulator, but it’s also a consortium, then who’s part of it? Who can be part of it? But that’s a bit unclear at the moment. And he said to Musk look, you kind of get into those conspiracy theories floating around there. Seana.
ADAM SHAPIRO: It’s actually Adam. Julia La Roche, thank you very much, an evacuated …
JULIA LA ROCHE: Adam.
ADAM SHAPIRO: – from a snowstorm here in Manhattan, enjoying the sunny shores of South Florida. However, we’re not done talking about what’s going on with GameStop just yet. And we heard quite a bit about this earlier in the day. Chester Spatt, former SEC chief economist, joined Yahoo Finance Live to discuss how the SEC and regulators should respond to Robinhood and other stock market apps that restrict trading in certain stocks.
CHESTER SPATT: Well, the SEC said it was monitoring developments late last week. And I think that is extremely important in the current situation. Some of the issues you were just talking about, namely the capital needs of – of Robinhood and necessity – and the possible necessity of the trading limits they imposed, are certainly something the committee staff should get to grips with, understand why … what was the nature of the capital before this of Robinhood happened? Was it insufficient capital – with capital letters?
What do the restrictions they have imposed mean, for example limiting … Not sure I understand, but limiting the game offer to one share. What kind of bring … what kind of causes that particular limitation? I think this is all important to understand. And the regulator, you know, at the same time might be interested in understanding whether the Redditors manipulated the markets to produce an artificial price. It seems to me that all the problems are on the table.
But these are matters for the staff, for them to explore. At this point, they don’t seem to me to rise to the level of legislators already attempting to conduct an autopsy. I think we should have the SEC staff do an autopsy first. And only later can legislators – must legislators debate possible changes to the regulatory framework. First, let’s see what our regulatory framework did, and why did it, and to what extent were the actions of the market participants appropriate?
MYLES ABROAD: And you know, Chester, you brought up the issue of market manipulation. I would love if you could perhaps briefly outline how the SEC is trying to determine when a security has been tampered with. Because I think there may be a popular misunderstanding that discussing a specific stock involves manipulation of that stock.
CHESTER SPATT: Well, I certainly wouldn’t – I certainly wouldn’t – think that discussing any particular stock would be manipulation. It has been a difficult issue for the committee to define. I am thinking of manipulation in terms of trying to create an artificial price. But I don’t think just communication, for example, that this stock is undervalued, because there is an opportunity for a short press.
Originally published