Maxine Waters (D-Calif.), President of House Financial Services, and other Democrats vow to investigate what role Wall Street hedge funds may have played in trying to stop trading.
Robinhood, which has grown rapidly as an easy-to-use platform for individual stock traders, says it restricts trading to meet financial obligations caused by the spike in trading.
“I am concerned about whether Robinhood has limited trading because there was a collusion between Robinhood and some of the hedge funds involved,” Waters said on MSNBC this weekend.
It was not clear whether Democrats would ask other financial institutions to testify. Democratic lawmakers are also examining the role of billionaire Ken Griffin-owned companies. The two companies – the hedge fund Citadel and trading firm Citadel Securities – denied responsibility for a broker’s decision to suspend trading. Citadel rescued a hedge fund suffering from GameStop’s stock surge, and Citadel Securities pays Robinhood to conduct its stock trades.
Representative Al Green (D-Texas), chair of the Financial Services Oversight Subcommittee, focuses on Citadel’s role in the GameStop saga. He said on Monday that he wants to know “if there was anything in this relationship that caused Robinhood to act, or did Robinhood for reasons related to its liquidity.”
Robinhood declined to comment on the hearing. A Waters spokesman did not respond to a request for comment.