The role of social media during the Reddit GameStop squeeze came under the microscope Thursday during the House Financial Services Committee’s hearing titled, “Game Stopped? Who Wins and Loses When Short Sellers, Social Media and Retail Investors Collide.”
Rep. David Scott, D-Ga., stated during the hearing that “this [GameStop trading] episode exposes a serious threat to our financial system when tweets, social media posts do more to move the market than material, legitimate information. The risk is enormous.”
Questioning Robinhood Markets CEO Vlad Tenev, Scott stated: “Don’t you see, something has gone terribly wrong here? What do you do to monitor the trade in individual stocks, particularly when the case of GameStop they’re singled out and moved on social media?”
Tenev responded: “Our priority throughout the exceptional market conditions in January and early February was to maintain the uptime and performance of our platform…”
Scott interrupted: “Do you, Robinhood, have any policies in place to ensure that investors are making trades based on legitimate, material, financial information and not the influence of social media and the design of trading platforms or any other superfluous information?”
Tenev replied: “Absolutely. We provide educational resources to our customers, including the redesigned Robinhood Learn portal,” which is also available to the general public.
“You’re at the center of this,” Scott said. “Don’t you see and agree that something very wrong happened here? And that you’re at the center of it?”
Scott then shifted his questioning to Steve Huffman, CEO and co-founder of Reddit, which includes the WallStreetBets bulletin board, and probed him on steps Reddit is taking to “protect” the financial system.