Congress is eyeing both Main Street and Wall Street to testify at its upcoming “Reddit Rally” hearing, including billionaire trader Ken Griffin.
The hearing before the House of Representatives on Feb. 18 is expected to include testimony from Griffin, founder and CEO of investment giant Citadel, according to Bloomberg, as well as key executives from no-fee trading app Robinhood and hedge fund Melvin Capital, according to Reuters. Executives from website Reddit, home to trading forum WallStreetBets, are also expected to appear, a person with knowledge of the hearing agenda told The Post.
The four firms have been at the center of an epic clash over the manic trading frenzy that sent GameStop shares up more than 1,600 percent last month. The retailer’s stock soared to outrageous heights as day traders on Reddit encouraged each other to make money squeezing Wall Street short sellers, like Melvin.
The hedge fund, founded by ex-Citadel trader Gabe Plotkin, lost a reported 53 percent in January. And Griffin — worth an estimated $15 billion, according to Forbes — stepped in to save Melvin, along with billionaire Steve Cohen’s Point 72 Asset Management, with a $2.75 billion investment.
But Citadel’s potential role in the bizarre trading phenomenon goes even deeper as it executes many of Robinhood’s trades through its Citadel Securities arm. In fact, Citadel’s deal to pay to process Robinhood’s trading data is largely what allows Robinhood to tout no-fee trading.
Citadel’s securities arm also clears trades and buys order flow from Robinhood competitors.
But that relationship has came under fire since Robinhood blocked users from buying popular runaway stocks like GameStop in January. The millennial-focused no-fee trading app has said the trading restrictions, which it’s since lifted, were implemented amid pressure by its Wall Street clearing house to raise $3 billion to support trading in volatile stocks like GameStop.
But that didn’t stop day traders like David Portoy from accusing Robinhood of setting the limits to protect Citadel and other Wall Street giants from losing money at the expense of small investors.
A spokesperson for Citadel declined comment on Griffin’s testimony, and representatives from Melvin Capital also declined to comment on the hearing. Robinhood and Reddit did not respond to requests for comment.