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GameStop hearing live: Reddit CEO says investment advice on his site ‘among the best’

GameStop hearing live: Reddit CEO says investment advice on his site ‘among the best’
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Eric Platt and Miles Kruppa

Robinhood chief executive Vlad Tenev admitted on Thursday that the company would not have been immediately able to meet a $3bn capital call from its equity clearinghouse on January 28. 

The remark in testimony before a House committee on financial services contrasted with some comments Tenev had made over the past several weeks, including that the company did not have a liquidity issue in January.

“At that moment we would not have been able to post the $3bn in collateral,” he said in response to a question from Anthony Gonzalez, a Republican member from Ohio, who asked if the company could have met a capital call that materialised at 5:11am on January 28 from the National Securities Clearing Corporation.

Robinhood ultimately restricted trading in several securities, including GameStop, to reduce the capital it needed to post to the clearinghouse.

Tenev, in defending the restrictions, told CNBC on that day: “There was no liquidity problem, and to be clear, this was done preemptively.”

“So when you said — and you’ve said this multiple times — that you did in fact have the liquidity and you didn’t have a liquidity problem, at that moment in time that is not necessarily true,” Gonzalez said.

“The Robinhood Securities team had to work with our relevant clearinghouses to adjust the risk profile of the trading day in order to meet our collateral requirements,” Tenev responded.

The Robinhood chief executive warned that had the company been unable to meet the capital call from its clearinghouse, it would have resulted in “a total lack of access to the markets” for its clients.

“A vulnerability was clearly exposed in your business model and perhaps in the regime that governs your cap requirements,” Gonzalez said. “We just can’t live in a world where my constituents could have their shares liquidated without their consent because you all aren’t able to make a capital call.”



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