The CEO of stock trading platform Robinhood said Friday that the company could have “communicated” better to investors on its decision to restrict the buying of stocks like GameStop after they were targeted by users on a Reddit subforum.
In an interview on the “All-In” podcast, CEO Vlad Tenev responded to pushback on the company’s decision to temporarily limit the buying of 13 heavily shorted stocks that were driven to record highs, including GameStop.
Both amateur investors and lawmakers across the aisle criticized the decision, claiming that it was limiting opportunities for new investors while favoring hedge funds and Wall Street traders.
“No doubt we could have communicated this a little bit better to customers,” Tenev said on the podcast, adding that the restriction measures were needed due to a substantial increase in deposit requirements by a post-trade regulator.
Tenev admitted that the reasoning was not included in automated emails sent to Robinhood customers early on Jan. 28.
“As soon as those emails went out, the conspiracy theories started coming, so my phone was blowing up with, ‘how could you do this, how could you be on the side of the hedge funds,’” he said.
The Robinhood co-founder went on to say, “We probably could have offered more detail into that with the foresight that maybe customers would think that a hedge fund forced us to do it.”
Tenev’s comments come a week before he is set to participate in a House Financial Services Committee hearing on the Reddit-driven stock rally.
Users on the r/WallStreetBets forum and other amateur investors in late January into February worked to drive up the price of stocks that traditional hedge funds have shorted, including GameStop, AMC and BlackBerry.
The Feb. 18 hearing will be split into two panels: one featuring government and industry investment regulators, with the other focused on the businesses and investors central to the recent stock market fluctuations.
Committee Chairwoman Maxine Waters (D-Calif.) said in a statement announcing the hearing that it would “examine the recent activity around GameStop (GME) stock and other impacted stocks with a focus on short selling, online trading platforms, gamification and their systemic impact on our capital markets and retail investors.”