The CEO of the Robinhood financial app will testify before a congressional committee later this month, as the backlash over its decision to limit trading in highly-leveraged stocks, such as GameStop (GME) - Get GameStop Corporation Report, continues, according to a published report Monday.
Robinhood CEO Vlad Tenev will testify before the House Financial Services Committee on Feb. 18, Politico reported, citing unnamed sources.
Robinhood abruptly limited trading in GameStop on Thursday amid an apparent short squeeze on it and other highly-leveraged stocks coordinate through online chat rooms and frequented by Robinhood traders.
The move sparked a backlash from retail investors who said they were being punished for their success in routing Wall Street pros who were shorting the stocks. Politicians quickly jumped into the fray as well, portraying Robinhood’s move as an attempt to protect Wall Street Goliaths from populist traders.
For its part, privately-held Robinhood says it was forced to limit trading and raise capital to meet increased margin requirements at the Depository Trust & Clearing Corporation (DTCC) clearing house driven by the surge in speculative trading through the site. "Robinhood has to operate within the existing regulatory environment," the company said in a blog post late Monday.
The company took in $3.4 billion from backers between Friday and Monday in a round led by Ribbit Capital with participation from existing investors including ICONIQ Capital, Andreessen Horowitz, Sequoia, Index Ventures, and NEA, the company said. Robinhood is in negotiations with banks to raise another $1 billion, Reuters reported late Monday, citing unnamed sources.
GameStop shares have continued to trade in a wide range, rising more than $100 Friday, only to fall back $100 in Monday's regular session and more in after-hours trading.
GameStop is a struggling brick-and-mortar video game retailer, hit hard by the COVID-19 shutdowns and the long-term decline in retail mall traffic.
Silver futures, which have also been targeted in retail investor chat rooms recently, slid late Monday after earlier surging to $29.42 an ounce at the midday settlement.