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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.

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.

Updated Feb 18, 2021 - Economy & Business

Robinhood CEO admits company did not respond perfectly to GameStop trading mania

Robinhood CEO Vlad Tenev apologized at a House hearing Thursday for the confusion caused by his platform's decision to restrict trading of certain "meme stocks," while admitting he did not handle the situation perfectly.

Yes, but: Tenev later admitted the company made mistakes, but could not spell out what those mistakes were — before Congress moved on to the next question.

Felix Salmon, author of Capital
Feb 18, 2021 - Economy & Business

Explaining GameStop hearing terms: Short-selling

Illustration: Aïda Amer/Axios

The reason that GameStop stock rose so sharply last month was, paradoxically, because so many people had bet that it was going down.

Why it matters: That kind of bet — known as short-selling — is often considered distasteful, or worse.