Congressional scrutiny of GameStop financial saga

Lawmakers are examining whether wild swings GameStop's stock price of has exposed conflicts in the market's structure that can hurt unsophisticated investors. Rep. Maxine Waters says “many Americans feel that the system is stacked against them.” (Feb. 18)

Video Transcript

MAXINE WATERS: Many Americans feel that the system is stacked against them, and no matter what, Wall Street always wins. In this instance, many retail investors appeared motivated by a desire to beat Wall Street at its own game. And given the losses that many retail investors have sustained as a result of volatility in the system, there are many whose belief that the system is rigged against them has been reinforced.

PATRICK MCHENRY: The GameStop story represents a larger truth. A fundamental change is happening. Like never before, everyday investors can communicate, access more information, and work collectively to move markets, all in real time.

VLAD TENEV: We don't answer to hedge funds. We serve the millions of small investors who use our platform every day to invest. Second, Robinhood immediately secured additional funds.

Altogether, through capital raising and other measures, we've increased our liquidity by more than $3 billion to cushion ourselves against increased collateral requirements and related market stress in the future. Despite the unprecedented market conditions in January, at the end of the day, what happened is unacceptable to us. To our customers, I'm sorry, and I apologize.

GABRIEL PLOTKIN: In the frenzy during January, GameStop stock rose from $17 to a peak of $483. I do not think anyone would claim that the price had any relationship to the intrinsic value of the business. The unfortunate part of this episode is that ordinary investors who were convinced by a misleading frenzy to buy GameStop at $100, $200, or even $483 have now lost significant amounts.

When this frenzy began, Melvin started closing out its position in GameStop at a loss-- not because our investment thesis had changed, but because something unprecedented was happening. We also reduced many other Melvin. Positions at significant losses, both long and short, that were the subject of similar posts.

KEITH GILL: It is true that my investment in that company multiplied in value many times. For that, I feel enormously fortunate. I also believe the current price of the shares demonstrates that I've been right about the company.

A few things I am not-- I'm not a cat. I'm not an institutional investor. Nor am I a hedge fund. I do not have clients, and I do not provide personalized investment advice for fees or commissions. I'm just an individual whose investment in GameStop and posts on social media were based upon my own research and analysis.