Robinhood CEO Vlad Tenev said the investment app could have explained more clearly why it had to block trading in GameStop and other stocks during last month’s Reddit-fueled market frenzy.
“I think the challenge was that we could undoubtedly have been able to communicate this a little better with customers,” Tenev said in a recent episode of the funded “All-In” podcast.
The confession came ahead of Tenev’s appearance at a congressional hearing on Thursday, where lawmakers will investigate GameStop’s unprecedented rise in GameStop’s stock price in January.
Robinhood’s decision to temporarily block traders from buying GameStop and others
“Memo shares” such as movie theater chain AMC Entertainment caused widespread outrage amid a populist market uprising led by Reddit’s WallStreetBets forum. The bulletin board had been pumping up such stocks in an effort to pressure hedge funds betting against them.
Robinhood communicated the move to its users with automated emails simply saying they were unable to buy certain stock, according to Tenev.
He said the reports should have included more information to prevent the allegations that Robinhood was acting on behalf of hedge funds hit by the explosion in GameStop’s stock. Tenev denied that any hedge funds played a role in the company’s decision to restrict trading.
“As soon as those emails went out the door, the conspiracy theories immediately started to come out, so my phone stood out with, ‘How could you do this, how could you be on the side of the hedge funds?’” Tenev said on Friday . episode of the podcast, which includes venture capitalist Chamath Palihapitiya and Robinhood investor Jason Calacanis.
“We could probably have given more details on that with the foresight that clients might think a hedge fund was forcing us to do that or something like that,” he added.
As he first revealed earlier this month, Tenev said Robinhood had to restrict trading because a Wall Street clearing house, the National Securities Clearing Corporation, asked the company to make a deposit of about $ 3 billion amid massive demand to GameStop shares.
Tenev is scheduled to appear at Thursday’s House Financial Services Committee hearing, along with Citadel boss Ken Griffin, Reddit CEO Steve Huffman and Keith Gill, the Reddit user who sparked the GameStop rally.