Clemens Kownatzki Shares Insight on Reddit's Response to the House Financial Services Committee Hearing on Robinhood
The House Financial Services Committee held a hearing on February 18th to hear from Vlad Tenev, CEO of Robinhood, Steve Huffman, CEO of Reddit, Ken Griffin, CEO of Citadel LLC., and Gabe Plotkin, CEO of Melvin Capital, on the GameStop trading scandal last month. Clemens Kownatzki shares his insights on the hearing, the message it sends to retail investors, and the message it sends to Wall Street.
“Robinhood was clearly not ready to accommodate some of the excess transaction volume and in my humble opinion, really did not anticipate nor understand what was happening,” says Dr. Clemens Kownatzki. “The notion of the little guys having punished some hedge funds was also exaggerated. Yes, some short sellers and hedge funds may have blown up. However, the larger market makers and certainly some of the more astute hedge funds saw an opportunity to sell a stock like Gamestop to retail investors at prices they could never have imagined,” Dr. Clemens says.
Key takeaways from the hearing seemed to be that there is a need for some type of reform in the stock market and to change the way it currently only benefits the ultra rich. How the United States government will react to the scandal remains unknown.
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