Robin Ten CEO Vlad Tenev on Friday refuted the ‘conspiracy theory’ that hedge funds had asked his company to stop trading on GameStop.
Tenev was asked during an interview with Yahoo Finance to set the record for why the mobile brokerage firm decided to restrict transactions with GameStop shares as prices rose last week.
“Oh, about the conspiracy theory, I think I kept saying it was not true,” Tenev said.
‘Our decision to temporarily restrict customers from buying certain securities had nothing to do with a market maker or a market participant or anyone like that who put pressure on us or asked us to do so.
“According to the regulation, it was all about the market dynamics and the requirement for deposit deposits,” he added.
Robin Ten, chief executive officer of Robinhood (right), refutes the ‘conspiracy theory’ that hedge funds led his company to suspend trading on GameStop.
Tenev (pictured) cites the conspiracy theories of the claims: ‘We decide to temporarily restrict customers from buying certain securities has nothing to do with a market maker or a market participant or anyone else as we have put pressure on or we asked not to do that ‘.
On Thursday, Robinhood began restricting the purchase of GameStop shares and several other stocks, causing outrage as small investors were excluded while large hedge funds and wealthy traders were able to buy and sell freely.
Robinhood’s restrictions on GameStop shares sparked furious accusations that the company wanted to refuel the stock for bad purposes, but Tenev continued to deny the allegations.
Major hedge funds have suffered an estimated $ 19 billion in losses as a result of their commitment to GameStop.
GameStop shares ended the day Friday at nearly 70 percent as Robinhood eased restrictions on buying the unlikely favorite market, though the broader market thought so, while the Dow fell 620 points amid concerns over the ripple effects of the bubble.
The stock in the theater chain AMC, which, like GameStop, was severely shorted, closed 54 percent.
The goal of a campaign on the online message board Reddit to ‘bet’ against the hedge funds, GameStop shares have risen about 1,800 percent since the beginning of the month when the ‘meme stock’ uprising got steam.
So far, the gains and losses for each side in the fight are mostly on paper, and each side hopes to survive the other before being paid out.
But as of Friday, investors betting on GameStop face about $ 19 billion in losses, with the damage amounting to only $ 10 billion on Wednesday, when GameStop shares rose 135 percent, according to data from Ortex provided to Business Insider.
Although their specific losses are not disclosed, hedge funds Melvin Capital, Citron and Maplelane LLC are known as one of those who took massive positions and bet that GameStop’s share price would fall.
Claims also spread on social media that Robinhood was forcibly selling shares of GameStop without the consent of the account holder, and the movements screamed furiously.
GameStop shares ended the day at nearly 70 percent as Robinhood eased restrictions on buying the unlikely favorite market, even as the broader market thought, while the Dow fell 620 points amid concerns over the ripple effects of the bubble.
GameStop shares rose another 67% on Friday, with an astonishing rally
But Robinhood claims that the forced sale of shares is only related to shares bought with borrowed money, or to the exercise of stock options, that is, contracts to buy or sell shares.
“Allegations that Robinhood is proactively selling customers’ shares outside of our standard margin-related sales or options allocation options are false,” a Robinhood spokesman told DailyMail.com on Saturday.
Buying shares ‘on margin’ means using funds borrowed from the broker, and it is not uncommon for brokers to automatically liquidate such shares if an account falls below the minimum balance sheet requirements. On Robinhood, users need an account balance of at least $ 2000 to trade on margin.
Marginal stocks could have further affected Robinhood’s balance sheet, and could have left the broker hooked in the event of a massive collapse of GameStop’s share price.
During the interview with Yahoo, Tenev was also asked what discussions he had with lawmakers.
“Look, I think we – everyone at Robinhood runs this business with integrity and looks first at our customers, the individual investors and their best interests,” he began.
‘Of course we are constantly in touch with our regulators and with legislators. And we keep doing it. And you know, I’m looking forward to talking to anyone about this.
‘Because I think it’s very technical, of course, and involves settlement mechanics, as you saw in some of your other conversations. And I think Robinhood made the right decision here, ‘he added.
The Securities and Exchange Commission in a statement on Friday suggested that it investigate the matter.
The SEC said it would “unnecessarily investigate actions taken by regulated entities that harm investors or otherwise their ability to trade certain securities”.
On Friday, Robinhood lifted its total ban on the purchase of GameStop shares, but limited users to just one share, unless they already own more.
The buying limits expanded to 50 different shares late Friday, including the name Starbucks and General Motors, in an apparent act of desperation, as the company’s cash reserves were stretched to the limit.
Vaccine manufacturers Moderna and NovaVax were also on the list. A Robinhood spokesman declined to confirm to DailyMail.com that the same shares would be restricted on Monday, saying only that the company would “continue to monitor the situation and adjust if necessary”.
The restrictions extend far beyond the ‘stock’, such as GameStop, which attracted interest this week, pointing to the dire financial position that Robinhood may be in.
Robinhood insists the restrictions are only temporary. “Our goal is to enable purchases for all securities on our platform,” the company said.
“This is a dynamic, volatile market, and we must and can continue to act to ensure that we meet our brokerage requirements so that we can serve our clients in the long term,” Robinhood said.
Robinhood was not the only trading platform that applied trade restrictions. TD Ameritrade also had restrictions on buying shares in 19 companies, most of which have a severe short circuit.