Ken Griffin, Robinhood Strike Again at Contemporary Outrage Over GameStop

(Bloomberg) — Robinhood Markets Inc. and Citadel Securities responded to renewed criticism of their actions throughout January’s meme-stock frenzy, after retail traders filed a class-action lawsuit final week.

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Citadel Securities, whose founder Ken Griffin testified concerning the episode throughout a February congressional listening to, fired off a sequence of tweets late Monday denying allegations that it pressured Robinhood to limit buying and selling. Robinhood, led by Chief Govt Officer Vlad Tenev, stated in an emailed assertion Tuesday that the lawsuit paints “a false narrative of collusion” with Citadel Securities.

Griffin added an announcement of his personal on Tuesday: “It must frustrate the conspiracy theorists to no end that Vlad and I have never texted, called or met each other. But I must say, kudos to Vlad and his team at Robinhood for their remarkable success story.”

Plaintiffs within the lawsuit allege that Citadel Securities amassed a considerable brief place in GameStop Corp. and different shares that exploded in worth, and that the market-maker pressured Robinhood to cease prospects from buying these shares, which the net brokerage did on Jan. 28.

Learn extra: Robinhood’s Collateral-Crunch Clarification Puzzles Wall Road

Senior executives at each Citadel Securities and Robinhood had “numerous communications with each other that indicate that Citadel applied pressure on Robinhood,” in accordance with the grievance filed Sept. 22 in federal courtroom in Miami.

Each companies have pushed again towards the notion that Citadel Securities directed the brokerage to limit purchases. Robinhood has stated it confronted a big demand for collateral from a central clearinghouse and scrambled to boost greater than $3 billion of extra capital within the following days.

“We will work vigorously to continue correcting the record with the facts,” Robinhood stated in its assertion Tuesday. The agency’s securities unit “was communicating with market-makers in an effort to ensure continued market access for our customers.”

Citadel Securities additionally tweeted a rebuttal to an accusation that Griffin lied to lawmakers: “When asked whether Citadel Securities requested that Robinhood restrict trading, Ken Griffin truthfully told Congress, ‘Let me be perfectly clear. Absolutely not.’”

The saga has drawn consideration to the advanced equipment behind the execution of trades. Robinhood sends buyer orders to Citadel Securities and different buying and selling companies to be carried out, and accepts remuneration from these companies in what’s known as cost for order circulation.

Whereas different retail brokerages akin to Charles Schwab Corp. additionally use such preparations, it’s notably vital to Robinhood, comprising about three-quarters of its income final yr and 80% within the first half of 2021, filings present.

Fee for order circulation, which critics have stated poses potential conflicts of curiosity, faces contemporary scrutiny from Securities and Alternate Fee Chair Gary Gensler, who has stated {that a} ban is feasible. Final week, Scion Asset Administration’s Michael Burry stated he acquired a subpoena from the SEC as part of an investigation into the meme-stock insanity.

Learn extra: Michael Burry Says He Acquired SEC Subpoena Over GameStop

Individually, Tenev defended his agency’s enterprise mannequin in a Wall Road Journal op-ed Tuesday. Fee for order circulation, he wrote, permits the corporate to supply commission-free trades with no account minimums, “which has helped a new generation of retail investors get started.”

Banning the follow, he stated, “is unlikely to help retail investors get better prices and would likely re-erect barriers that kept so many out of the market.”

Addressing criticisms that Robinhood lures inexperienced traders with game-like ways to maintain them buying and selling extra, he wrote: “Investing isn’t a game, but must it be grim and difficult to understand?”

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