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Robinhood CEO Vlad Tenev said the investing app could have more clearly explained why it had to block trades of GameStop and other stocks during last month’s Reddit-fueled market frenzy.
“I think the challenge was that no doubt we could have communicated this a little bit better to customers,” Tenev said on a recent episode of the financed-focused “All-In” podcast.
The admission came ahead of Tenev’s appearance at a Thursday congressional hearing where lawmakers will probe January’s unprecedented surge in GameStop’s share price.
Robinhood’s decision to temporarily block traders from buying GameStop and other
“meme stocks” such as cinema chain AMC Entertainment sparked widespread outrage amid a populist market insurrection led by Reddit’s WallStreetBets forum. The message board had been pumping up such stocks in an effort to squeeze hedge funds that bet against them.
Robinhood communicated the move to its users with automated emails that simply said they were restricted from buying certain stocks, according to Tenev.
He said the messages should have contained more information to head off allegations that Robinhood was acting at the behest of hedge funds who were taking a hit from the explosion in GameStop’s shares. Tenev denied that any hedge funds played a role in the firm’s decision to limit trading.
“As soon as those emails went out, the conspiracy theories immediately 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?’” Tenev said on the Friday episode of the podcast, whose hosts include venture capitalist Chamath Palihapitiya and Robinhood investor Jason Calacanis.
“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 or something like that,” he added.
As he first revealed earlier this month, Tenev said Robinhood had to restrict trading because a Wall Street clearinghouse called the National Securities Clearing Corporation asked the company for a roughly $3 billion deposit amid the massive demand for GameStop shares.
Tenev is slated to appear at Thursday’s House Financial Services Committee hearing alongside Citadel boss Ken Griffin, Reddit CEO Steve Huffman and Keith Gill, the Reddit user who’s been credited with sparking the GameStop rally.
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