Congress announces hearings on stock market in light of Robinhood vs. Reddit battle
Both the Senate and the House are looking into Wall Street's market practices, especially short-selling.
Legislators are responding fast to the madness surrounding GameStop and AMC shares and the hedge funds selling them short.
On Thursday, Chairwoman of the House Financial Services Committee Maxine Waters announced a coming hearing on short-selling. Sherrod Brown, the incoming chairman of the Senate Banking Committee, similarly called for a reexamination of stock market rules.
Short-selling has been the subject of widespread controversy as the past two days have seen wild volatility for certain securities, especially Gamestop. Retail traders, communicating via Reddit and buying on Robinhood, have been busy buying up GME in the face of soon-to-expire short positions from several major hedge funds.
Earlier on Thursday, Robinhood and a number of other platforms aimed at retail investors cancelled the buying of GME in what many have been calling unfair collusion with the hedge funds in question. Waters said:
"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."
Alexandria Ocasio-Cortez and Rashida Tlaib, who both sit on the House Financial Services Committee, both announced their firm opposition to Robinhood's action, with AOC calling for a hearing as well.
