Feb 19, 2021 - Politics & Policy

GameStop hearing paints Silicon Valley as public enemy #1

a boxing glove punching a keyboard

Illustration: Annelise Capossela/Axios

Congress yesterday lived down to its reputation, uncovering little new information about the GameStop stock surge. But it did illustrate how Silicon Valley has overtaken Wall Street as public enemy number one, particularly among Democrats.

What happened: No one received more questions, and more rhetorical brickbats, than Robinhood CEO Vlad Tenev, despite the presence of hedge fund titans Ken Griffin and Gabe Plotkin.

  • Tenev was partially a victim of Robinhood's own ham-handed communications last month — for days refusing to acknowledge that it stopped trading in GameStop and other "meme stocks" because of unprecedented collateral requirements from their clearinghouse. And his continued insistence that Robinhood didn't have a liquidity problem, even though that's precisely what it had.
  • But he mostly seemed to be an avatar for anger at Big Tech, even if that anger wasn't particularly focused.
  • In some cases, Robinhood was hammered for stopping retail investors from buying GameStop shares. In other cases, it was hammered for not warning people about the dangers of buying GameStop shares. In one case he was challenged to disclose information the company already discloses.

Griffin and Plotkin, by comparison, were bit players. They were pressed a bit on short-selling, including the fact that more GameStop shares were floated than are outstanding, and Griffin was once asked to confirm that no one at Citadel (the hedge fund) discussed GameStop with Robinhood (which does business with Citadel Securities, the market-maker).

  • In past eras, it's the hedge fund managers that would have felt most of Congress' ire.

Reddit CEO Steve Huffman received even less questions than did Griffin and Plotkin, which complicates my Silicon Valley narrative a bit. But it really just felt like none of the representatives really knew what to do with him at this particular hearing. Plus, Tenev was the easier target to hit in five-minute questioning sessions.

The bottom line: Where you find D.C. scrutiny, some sort of regulation is likely to follow. Even if the path isn't direct.

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