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Photos: Getty Images, company websites, Keith Gill courtesy of YouTube; Graphic: Andrew Witherspoon/Axios

There's little consensus about what went wrong, if anything, during the trading mania that drove a group of "meme stocks" to meteoric heights — and those tensions could animate today's GameStop-centered Congressional hearing.

Why it matters: What went wrong and who's to blame — short-sellers, Robinhood, Reddit daytraders, etc. — depends on whom you ask. Any of the witnesses set to appear could be targeted, and there's not much clarity about what direction Congress might go in response.

  • "What went wrong depends on where you sit," Larry Tabb, head of market structure at Bloomberg Intelligence, tells Axios.

Where it stands: Regulators — and reportedly the Justice Department — are looking into whether anything unlawful happened in the wild days of trading that caused GameStop's stock to surge as much as 2,000% before falling back down to earth.

What to watch: Key sticking points for lawmakers include payments for directing trades to the likes of Citadel Securities, the length of trade settlements, market manipulation (on-and-off Reddit), and the rise of platforms that make it easy to trade.

A sign of the tension: "The Robinhood interface should not be providing visual rewards for day trading," referring to the confetti that appears when you make your first trade, Rep. Brad Sherman (D, Calif.), a member of the Financial Services Committee, which is holding today's hearing, tells Axios.

  • Sherman adds: "There's been a stick it to the man idea here, and if you want to stick it to the short sellers then come to us with proposals on how to limit short selling. Don't buy a stock for more than you think it's worth."

The bottom line: The meme-stock phenomenon is over, for now. The next big question is whether the hearing will lead to legislation, and experts say that's unlikely.

  • "We need to listen to determine if there were situations where existing rules and regulations failed — and then pursue aggressively ... but it may turn out that the system worked as designed," Rep. Frank Lucas (R, Okla.), another member of the panel, tells Axios.

Go deeper

Citadel and Robinhood CEOs will call for new stock trading rule at GameStop hearing

Co-founder and CEO of Robinhood Vladimir Tenev. Photo: Noam Galai / Getty Images

Players central to the GameStop market bonanza will call on Congress to shorten the time required for stock trades to settle, according to testimonies released ahead of their appearances at a Congressional hearing on Thursday.

Why it matters: A typically obscure part of stock trading is set to be among the issues at the forefront — as Robinhood and others look to deflect the anger that stemmed from the Reddit-fueled stock frenzy.

Reddit user behind GameStop saga releases opening statement ahead of hearing

Wall Street protesters. Photo: Tayfun Coskun/Anadolu Agency via Getty Images

Keith Patrick Gill, known on YouTube and Twitter as Roaring Kitty, released his opening statement ahead of testimony before the House Financial Services Committee on Wednesday about his role in the surge of GameStop's stock price.

The big picture: Gill will join the CEOs of Reddit, Robinhood, Citadel and Melvin Capital at Wednesday's hearing. The committee plans to "examine the recent activity around GameStop (GME) stock and other impacted stocks with a focus on short selling, online trading platforms, gamification and their systemic impact on our capital markets and retail investors," per a statement by Rep. Maxine Waters (D-Calif.), chair of the committee.

Dion Rabouin, author of Markets
Feb 17, 2021 - Economy & Business

Hedge funds will be the villain at GameStop hearing

Illustration: Annelise Capossela/Axios

The House Financial Services Committee will convene a hearing tomorrow on "recent market volatility involving GameStop stock and other stocks" to continue the whodunnit of the current state of financial markets, especially U.S. stocks.

What's happening: Chair Maxine Waters will question the CEOs of Reddit, Robinhood, Citadel Securities, Melvin Capital and Keith Gill, also known as Roaring Kitty or u/DeepF--kingValue.