Robinhood's CEO denies the trading platform is facing liquidity issues amid investor frenzy
RobinhoodCEO Vlad Tenevsaid on CNBCThursday the company doesn't have liquidity issues.
- Concerns arose after Robinhood drew down its credit lines amid the trading frenzy on its platform.
- Tenev also defended the company's choice to pause trading of some stocks, which outraged customers.
Robinhood CEO Vlad Tenev shot down speculation on Thursday about the company's finances, telling CNBC's Aaron Ross Sorkin "there was no liquidity problem."
The rumors arose after Bloomberg reported Robinhood had borrowed "at least several hundred million dollars" from banks amid the recent trading frenzy on its platform."In terms of the credit lines," Tenev told CNBC, "that was really a proactive measure."
"Some of these requirements fluctuate quite a bit based on volatility in the
Robinhood temporarily blocked people from buying those stocks, outraging customers, one of whom filed a class-action lawsuit Thursday. Tenev defended the restrictions, telling CNBC that Robinhood has always stood for "everyday investors ... opening up access and giving them the ability to trade commission-free in whatever they want."
"I know how Clorox and Lysol felt in the pandemic when they were running out of hand sanitizer and supplies," he added. "We just haven't seen this level of concentrated interest market-wide in a small number of names before."
The move also drew criticism from the broader retail investor community, several progressive lawmakers including Reps. Alexandria Ocasio-Cortez and Ro Khanna, regulators, and even Tesla CEO Elon Musk, a popular figure among r/WallStreetBets members.Democrats in Congress have said they will hold at least two hearings about Wall Street's practices following the GameStop short-squeeze.
The trading frenzy this week has ignited a larger debate about how financial markets should be regulated and what will happen to the sky-high prices of companies like GameStop.
When asked by Sorkin whether he believes these stocks are "divorced from reality," Tenev replied: "I think people need to be informed. They need to be educated. We do want to give them the ability to do that, but I also believe that, access is a very powerful thing. The more individual investors have access to the markets, the better off we will be."
- Bihar has no governance, state budget a bundle of lies : Tejashwi in assembly
- Haryana to table anti-conversion bill in upcoming budget session: Minister
- Bihar saw 8-fold growth in budget size during both RJD and NDA regimes : Tejashwi
- MVA govt trying to curtail budget session citing pandemic: BJP
- Gangubai Kathiawadi: An inspiring journey of a brothel head and a political leader of Kamathipura