Robinhood CEO admits lack of communication earlier than Reuters’ home testifies

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© Reuters. FILE PHOTO: Vlad Tenev, co-founder and co-CEO of investment app Robinhood, speaks during the TechCrunch Disrupt event in Brooklyn, New York

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By John McCrank

NEW YORK (Reuters) – Robinhood, the trading app popular with young investors, could have better explained why it put restrictions on buying sharply shortened stocks hit by the social media-fueled trading frenzy GameStop Corp. (NYSE 🙂 said the company’s chief executive officer.

“No doubt we could have communicated this a little better to customers,” said CEO Vlad Tenev late Friday on the All-In podcast, hosted by Chamath Palihapitiya, who had harshly criticized Robinhood for the trade restrictions, and Jason Calacanis, a Robinhood- Investor.

Tenev’s comments came ahead of his planned February 18 testimony from the US House Financial Services Committee about the trade turmoil and Robinhood’s role in it. The CEOs of Citadel Securities, Melvin Capital and Reddit will also testify.

Robinhood did not respond to a request for comment.

Robinhood outraged many of its clients when on Jan. 28 it restricted purchases of 13 sharply shortened stocks that had been pushed to record highs, including GameStop, whose shares were up more than 1,600%.

The moves were partly due to retail investors coordinating on sites like Reddit’s WallStreetBets to hike prices and force hedge funds like Melvin to unwind their declining positions. Several other brokers also restricted trading in stocks.

Tenev said the restrictions were necessary because the post-trade regulator greatly increased deposit requirements. However, this was not spelled out in automated emails sent to Robinhood customers early January 28th.

“As soon as those emails were sent, the conspiracy theories popped up and my phone exploded with the question, ‘How can you do this, how can you be on the side of the hedge funds? “, He said.

“We probably could have elaborated on this, with the foreseeable future that customers might believe that a hedge fund forced us to do it,” he said later.

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