Roaring Kitty, Ken Griffin, Vlad Tenev To Be Among Those Testifying At House Hearing

Citadel Founder and CEO Ken Griffin

An event is coming this week that should offer up plenty of material for documentary writers who are already hard at work in covering the GameStock stock saga.

House Hearing: Many of the major names who were at the center of the storm — WallStreetBets, Robinhood, Citadel, Melvin Capital — will be represented when the House Financial Services Committee convenes a virtual hearing this coming week.

The hearing is set to be livestreamed at noon on Thursday on the committee's website, led by committee chair Maxine Waters, a California Democrat.

Hedge Funds In Hot Seat: The hearing, titled "Game Stopped? Who Wins and Loses When Short Sellers, Social Media, and Retail Investors Collide," could lean more heavily on the hedge funds than the others, if Congresswoman Waters' recent statement is any indication. On Jan. 28, when the furor over GameStop Corp. GME was at fever pitch, she issued a statement that took aim at hedge funds.

“Hedge funds have a long history of predatory conduct and that conduct is entirely indefensible. Private funds preying on the pension funds of hard working Americans must be stopped. Private funds engaging in predatory short selling to the detriment of other investors must be stopped," she said. "As a first step in reining in these abusive practices, I will convene a hearing 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."

Plenty To Talk About: Traders on the Reddit subforum WallStreetBets kicked off the frenzy when they organized to put a massive short squeeze on GameStop and other stocks. Hedge funds were left back-footed and struggling to cover their short positions. This included Melvin Capital, which then had to scramble to raise money, including $2.75 billion from Citadel.

Citadel also is connected to the sage through its affiliate Citadel Securities. Robinhood's trade orders are handled by Citadel Securities, which pays Robinhood for the order flow — the crucial link that allowed Robinhood to pioneer no-commission trading.

The situation led to Robinhood halting the purchases of heavily-shorted stocks including GameStop as it struggled to meet collateral obligations for clearing trades. That move in turn led to an outcry among traders, as well as conspiracy theories over Wall Street pressure, prompting Robinhood to issue an explanation of its move.

Photo by Paul Elledge via Wikimedia.