House Financial Services committee holds hearing on GameStop stock drama

CBS News' Nancy Chen reports on the GameStop hearing in which Reddit trader Keith Gill, aka "Roaring Kitty," appeared before Congress, along with the CEOs of Reddit, Robinhood and hedge fund Melvin Capital Management.

Video Transcript

- Lawmakers held a hearing Thursday focused on the GameStop trading frenzy. Stock in the company rose nearly 3,000% in January, before it came crashing down. Nancy Chen reports.

KEITH GILL: My family was not wealthy.

NANCY CHEN: Keith Gill may be better known by his online alias, "Roaring Kitty". The name he used during the GameStop trading frenzy.

KEITH GILL: It is true that my investment in that company multiplied in value many times. For that, I feel enormously fortunate.

NANCY CHEN: Gill mobilized an army of investors through the wallstreetbets group on Reddit, whose CEO defended the platform's role in the January drama.

STEVE HUFFMAN: Wall Street Bets may look sophomoric or chaotic from the outside, but the fact that we're here today means they've managed to raise important issues.

NANCY CHEN: Much of the buying happened on the Robinhood trading platform, whose CEO faced pointed questioning from the House Financial Services Committee.

- I don't have time. I just need a yes or no answer.

- Why did Robinhood restrict the buying but not the selling?

NANCY CHEN: Vlad Tenev told lawmakers, when the app halted buying at the height of the run up, it was not to protect the hedge funds who had bet against the stock and were losing billions.

VLAD TENEV: Robinhood securities put the restrictions in place in an effort to meet increased regulatory deposit requirements, not to help hedge funds. We don't answer to hedge funds.

NANCY CHEN: One of those hedge funds was Melvin Capital Management, whose CEO described a barrage of hostile posts from small investors.

GABRIEL PLOTKIN: Many of these posts were laced with anti-Semitic slurs, directed at me and others. The post said things like, "It's very clear we need a second Holocaust."

NANCY CHEN: The wild swings unsettle both Wall Street and Congress, creating then destroying billions of dollars wealth and opening a new debate about the need for stricter regulations. Nancy Chen, CBS News, New York.