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      GameStop hearing: Robinhood founder defends halt to trading

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      Robinhood’s chief executive defended the app’s decision to halt trading in GameStop shares at a congressional hearing on Thursday, calling allegations that the company acted to help hedge funds that were hemorrhaging money “absolutely false”. The comments triggered accusations the company is creating a “smokescreen” to deflect blame.Vlad Tenev and other players in the GameStop saga appeared before the House financial services committee in the first public hearing in a wide-ranging investigation into trading in GameStop, AMC and other companies whose share values soared as small investors piled into the stocks.“The buying surge that occurred during the last week of January in stocks like GameStop was unprecedented, and it highlighted a number of issues that are worthy of deep analysis and discussion,” Tenev said.Tenev once again apologized for the trading ban. “Despite the unprecedented market conditions in January, at the end of the day, what happened is unacceptable to us,” Tenev said.The sometimes fractious hearing was largely divided along party lines, with Democrats calling for more oversight and Republicans arguing against more regulation.“Don’t you see something has gone terribly wrong here?” said Democrat congressman David Scott. He called social media-led stock market bubbles “a threat to the future of our financial system”.Republican Bill Huizenga called the hearing “political theater”, a comment that drew admonition from the committee chair, Maxine Waters.GameStop’s shares surged 1,600% in January as small investors worldwide – many coalescing on the Reddit forum WallStreetBets – piled into the troubled retailer’s shares betting against Wall Street hedge funds that had bet the share price would collapse – a practice known as short-selling. At one point, short-sellers had borrowed far more of GameStop’s shares (140%) to sell short than were available on the market.According to Tenev, Robinhood and other brokers had no choice but to suspend trading in GameStop and other hot investments during this period of “historic volatility”.Robinhood is required to place a deposit using its own funds at a clearinghouse to cover risks until trades are settled between a buyer and seller. On 28 January, the company was informed by its clearing house, NSCC, that it had a deposit deficit of approximately $3bn – up from $124m just days before.With trading in hot stocks suspended, Robinhood moved to raise $3.4bn from investors and trading was resumed.But the suspension triggered a firestorm of criticism among small investors and in Washington, with Republicans and Democrats attacking Robinhood and accusing it of backing the losing hedge funds over small investors.Christopher Iacovella, the chief executive of the brokerage-industry group American Securities Association, dismissed Tenev’s explanation and said the system had worked as it should to defend the US’s financial system.“As the GME [GameStop] short squeeze unfolded, the clearinghouse recognized that an inadequately capitalized broker-dealer could pose a risk to our markets and it took the action necessary to protect the system,” Iacovella said in a letter to the House committee. “Attempts to blame the clearinghouse or the timing of the settlement cycle for what happened during the short squeeze are a smokescreen.”Thursday’s hearing, titled Game Stopped? Who Wins and Loses When Short Sellers, Social Media, and Retail Investors Collide, is the first of a series and addressed a number of issues including the “gamification” of investing, the role of social media and potential conflicts of interest.The representatives questioned the role of Citadel, an investment firm that executes Robinhood clients’ trades and also invested in Melvin Capital Management after the hedge fund’s bets against GameStop collapsed.Both Citadel’s founder, Ken Griffin, and Melvin’s founder, Gabe Plotkin, testified at the hearing. In his testimony, Plotkin denied that Citadel “bailed out” Melvin. “It was an opportunity for Citadel to ‘buy low’ and earn returns for its investors if and when our fund’s value went up,” he said.Plotkin said January’s frenzied trading in GameStop was “untethered to fundamentals” and quoted racist messages aimed at him and others, including antisemitic statements such as “it’s very clear we need a second Holocaust, the Jews can’t keep getting away with this.”“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,” said Plotkin.GameStop’s share price has now collapsed from a high of $483 on 28 January to just over $44. But one of the small investors who helped drive the stock to dizzy heights is still a believer.In his testimony Keith Gill, a trader variously known online as Roaring Kitty and DeepFuckingValue, said his investments had made him a millionaire.“GameStop’s stock price may have gotten a bit ahead of itself last month, but I’m as bullish as I’ve ever been on a potential turnaround. In short, I like the stock,” he said. More

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      GameStop: US lawmakers to quiz key players from Robinhood, Reddit and finance

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      Frenzied trading in the shares of GameStop and other companies will be the subject of what is expected to be a fiery hearing in Congress on Thursday, when US politicians get their first chance to quiz executives from the trading app Robinhood, Reddit and other players in the saga.The House financial services committee will hold a hearing at noon in a first step to untangling the furore surrounding trading in GameStop, AMC cinemas and other companies whose share values soared to astronomical levels as small investors piled into the stocks.The hearing, titled Game Stopped? Who Wins and Loses When Short Sellers, Social Media, and Retail Investors Collide, is expected to be fractious.Shares in GameStop, a troubled video games chain store, soared 1,600% in January, as an army of small investors, many using the trading app Robinhood, appeared to have bet that Wall Street hedge funds had overplayed their hand when betting the stock price would collapse – a practice known as short-selling.Spurred on by meme-toting members of the Reddit forum WallStreetBets, investors kept buying the shares, driving up the price and triggering huge losses for some hedge funds.Robinhood briefly suspended trading in GameStop and other hot stocks at the end of January and sparked allegations that the hedge funds and others may have pushed Robinhood and other trading platforms to stop the rout.The news managed to – briefly – unite Washington’s deeply divided political elite. Both the rightwing senator Ted Cruz and the progressive representative Alexandria Ocasio-Cortez attacked Robinhood’s decision to halt trading in GameStop by small investors.Ocasio-Cortez sits on the bipartisan financial services committee.Among those testifying are:Robinhood’s CEO, Vlad Tenev.
      Reddit’s CEO, Steve Huffman.
      Gabe Plotkin, founder of the Melvin Capital Management hedge fund, which was forced into a rescue after retail traders crushed its bets against GameStop.
      Ken Griffin, billionaire CEO of Citadel, an investment firm that executes Robinhood clients’ trades and also helped to bail out Melvin.
      Keith Gill, a trader variously known online as Roaring Kitty and DeepFuckingValue and a longtime GameStop booster.
      The hearing marks the first time the major players in the GameStop controversy have all been forced to publicly reckon with the anger the episode provoked among small investors and across the political spectrum.Gregg Gelzinis, associate director for economic policy at the Center for American Progress, said: “The GameStop drama raised quite a few public policy questions but first it’s important for members of Congress to understand how events played out.”Gelzinis said there were still questions about the timeline of events. More broadly, he said, GameStop had highlighted many crucial issues for regulators, including the role and regulation of hedge funds, whether or how Wall Street is using social media to drive investment strategy, the “gamification” of investing by trading apps and the economic incentives at play for the trading platforms.“What would have happened if Robinhood had failed? What would have been the knock-on effects for financial markets?” he asked. “These are huge investor protection questions.“I saw someone on Twitter describe it as a Rorschach test for financial regulators,” he added.The hearing will not be the last inquiry that the executives at the center of the controversy will face. Federal prosecutors have begun an investigation, according to the Wall Street Journal, and the Securities and Exchange Commission, the US’s top financial watchdog, is reportedly combing through social media posts for signs of potential fraud.In the meantime, evidence has emerged that small investors were not the largest buyers of GameStop and other hot companies. According to an analysis by JP Morgan, institutional investors may have been behind much of the dramatic rise in the share price.“Although retail buying was portrayed as the main driver of the extreme price rally experienced by some stocks, the actual picture may be much more nuanced,” Peng Cheng, a JP Morgan analyst, told clients in a note.Gelzinis said Thursday’s hearing was likely to raise as many new questions as it answered but was a necessary first step to understanding the seismic changes in investing that GameStop highlighted.“This is only the start of the story,” he said. “It’s clear this is not just a clearcut small investor versus Wall Street story. It’s a fairly messy picture but hopefully by the end we can paint a clearer picture and draw up some public policy conclusions from it.” More

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      Pelosi announces plans for 9/11-style commission to examine Capitol riot

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      House Speaker Nancy Pelosi said on Monday that the US Congress will establish an outside, independent commission to review the “facts and causes” related to the deadly 6 January insurrection at the US Capitol by supporters of Donald Trump in the waning days of his presidency.Pelosi said in a letter to members of Congress that the commission would be modeled on a similar one convened after the 11 September 2001, terrorist attack on Washington and New York.Democratic and Republican lawmakers had issued calls for a bipartisan 9/11-style commission to investigate why government officials and law enforcement failed to stop the attack on the Capitol in January, while both chambers of Congress were engaged in the process of certifying Joe Biden’s election victory.The calls followed Trump’s acquittal in his second impeachment trial, in which he was accused of inciting the insurrection after months of stoking his supporters with exhortations to try to overturn the election result and an inflammatory rally on the day itself, outside the White House, when he urged angry supporters to march on the Capitol.Pelosi said on Monday that the panel will also look at the “facts and causes” behind the catastrophe, in which five people died on 6 January, including a police officer, many were injured, and two police officers died by suicide in the days that followed.There were renewed calls from both parties on Sunday for such a commission.“We need a 9/11 commission to find out what happened and make sure it never happens again, and I want to make sure that the Capitol footprint can be better defended next time,” said Lindsey Graham, a Republican senator of South Carolina and close Trump ally who voted to acquit the former president on Saturday. “His behavior after the election was over the top,” Graham said of the former president on Fox News Sunday.Democrat Chris Coons of Delaware agreed. Speaking on ABC’s This Week, he said that a bipartisan commission would “make sure we secure the Capitol going forward and that we lay bare the record of just how responsible and how abjectly violating of his constitutional oath Trump really was”.Pelosi’s statement on Monday referred to a review that has been underway, led by retired US army general Russel Honoré.Pelosi said: “For the past few weeks, General Honoré has been assessing our security needs by reviewing what happened on January 6 and how we must ensure that it does not happen again … It is clear from his findings and from the impeachment trial that we must get to the truth of how this happened.”She continued: “Our next step will be to establish an outside, independent 9/11-type commission to “investigate and report on the facts and causes relating to the January 6, 2021, domestic terrorist attack upon the United States Capitol Complex … and relating to the interference with the peaceful transfer of power, including facts and causes relating to the preparedness and response of the United States Capitol Police and other Federal, State, and local law enforcement in the National Capitol Region.” More

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      Jamie Raskin derides 'explosive and deranged' tactics of Trump lawyers

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      The architect of Donald Trump’s second impeachment trial has blamed “explosive and deranged” tactics by the former president’s lawyers for obscuring the strength of the case presented by House Democrats.But the lead impeachment manager, Jamie Raskin, said the Democrats’ case appeared nevertheless to convince even Senate Republican leader Mitch McConnell of Trump’s guilt in inciting the Capitol riot.Two days after Trump escaped conviction, and as his supporters reveled in the prospect of his return to frontline politics, Raskin also told the Washington Post it was both “good and terrible to watch” McConnell’s post-verdict speech in which he excoriated Trump – but said he had voted to acquit because the trial was unconstitutional.It was telling, Raskin said, that many of the 43 Republicans who voted to acquit “felt the need to hang their hats” on that argument, which was rejected by constitutional scholars and twice by the Senate itself.Not even Trump’s lawyers attempted to defend what Democrats characterized as Trump’s “big lie”: that he won an election he actually lost by more than 7m popular votes and 74 electoral votes.They couldn’t get a summer internship with My Cousin VinnyNor did Trump’s legal team, led by a personal injury lawyer and a former county prosecutor who declined to pursue charges against Bill Cosby, succeed in freeing Trump from blame for the attack on the Capitol, judging by Republican senators’ speeches.Instead, Trump’s lawyers denied a copious and unambiguous record of what the former president said and did, while drawing false parallels between routine political speech and Trump’s coup attempt.In the final vote of the impeachment trial, seven Republicans voted with Democrats to convict Trump – a 53-vote tally 10 short of the total required.In an indication of how the Republican party has diverged from the popular will, almost six in 10 Americans – 58% – believe Trump should have been convicted, according to a new ABC News-Ipsos poll.Raskin and his fellow House managers were widely praised for their work. Their case featured extensive use of video of events at the Capitol on 6 January, when supporters told by Trump to “fight like hell” to overturn his election defeat broke in, some hunting lawmakers to kidnap or kill. Five people died as a direct result of the riot.Raskin took on the lead role despite his son having killed himself in December. He told the Post he “told managers we were going to make a lawyerly case but would not censor the emotion”.There has been criticism among Democrats, after the managers persuaded the Senate to vote to call witnesses but then agreed to avoid that step, which could have lengthened the trial. On Sunday, Raskin said witnesses would not have changed any minds.“These Republicans voted to acquit in the face of this mountain of un-refuted evidence,” he told NBC. “There’s no reasoning with people who basically are acting like members of a religious cult.”The Virgin Islands delegate Stacey Plaskett, also widely praised for her role in the trial, told CNN: “We didn’t need more witnesses, we needed more senators with spines.”[embedded content]More evidence of Trump’s alleged wrongdoing may yet be unearthed. Members of Congress from both parties have called for a bipartisan 9/11-style commission to investigate why government officials and law enforcement failed to stop the attack on the Capitol.Trump lawyers Michael van der Veen, Bruce Castor and David Schoen celebrated their client’s acquittal but faced widespread ridicule for a case built on flimsy arguments about freedom of speech and scattershot whataboutism concerning Democratic attitudes to protests against racism and police brutality.“They couldn’t get a summer internship with My Cousin Vinny,” Raskin told the Post, perhaps a deliberate reference to a bizarre and famously sweaty press conference given in November by another Trump lawyer, Rudy Giuliani, amid the former president’s failed attempts to prove mass fraud in his election defeat by Joe Biden.My Cousin Vinny is an Oscar-winning 1992 comedy about a hapless lawyer played by Joe Pesci. Giuliani said it was his “one of my favorite law movies, because he comes from Brooklyn”.Trump, who comes from Queens, refused to testify in his own defence. Raskin called him “a profile in absolute cowardice” and said: “He betrayed the constitution, the country and his people.“Trump’s followers need to understand he has no loyalty to them … Donald Trump is the past. We need to deal with the future.” More

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      Trump’s acquittal marks a dark day for US democracy | Letters

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      The deepest problem affecting the progress and development of democracy is the crippling dominance of party-first politics (Senate Republicans stand by their man and Trump wins his second acquittal, 13 February). It restricts the power of politicians to act in the best interests of their countries and their people.
      The clear illustration of the power of party politics has been the trial of Donald Trump. Before the trial began, and ahead of any formal evidence being heard, the base of the Republican party had already decided the outcome. Thus, the verdict of one of the most politically important trials in history was given based on party dogma and not on the evidence, nor in the interests of the country.
      Countries around the world with similarly blinkered party systems will also be rejuvenated. This will be embraced by the Victorian-era-entrenched Conservative party in the UK, which will be enabled to continue and extend its oligarchic rule which is swiftly becoming a kakistocracy.
      Party politics should reflect the will of an ever-changing society. It has, however, become the greatest barrier to progress and fairness. Until politicians are selected solely on ability, rather than party loyalty and populism, democracy will exist only in name and civilised evolution will stagnate and devolve. Matt Minshall Batz-sur-Mer, Brittany, France
      • The second acquittal of Donald Trump by the US Senate represents a profoundly dark and dangerous moment for American democracy. The message is clear. No conduct, be it inviting foreign powers to interfere in an election or fomenting violence to overthrow its result, is sufficiently abhorrent to permanently bar a candidate from holding public office. It now falls to the justice department and state prosecutors to succeed where Congress has failed and hold Trump truly accountable. If they do not, the US need only wait for the next attempt to subvert its democracy. Daniel Peacock New Moston, Manchester
      • Most Republican senators did not honour their oath to “do impartial justice”, but voted politically instead. If the US’s system of governance is unable to hold Trump to account for his attempt to overthrow the result of a fair and free election, its much-vaunted constitution is simply not fit for purpose. Pete Stockwell London
      • Jonathan Freedland is (almost) completely right (Acquitting Trump would spell grave danger for US democracy, 12 February). However, he errs in his report of Donald Trump’s relationship with violence and the rule of law. Trump had not been “whipping up his supporters for nearly a year”. His incitement to violence and failure to accept election results began before he stood as president in 2016, and continued throughout his term.
      At rallies as long ago as 2015, Trump was encouraging violence against his opponents. His tolerance of violence and recognition of its attraction to a section of his base was confirmed when he said, in January 2016, “I could stand in the middle of Fifth Avenue and shoot somebody and I wouldn’t lose voters”. Even before the 2016 election he refused to confirm that he would accept the result, raising rigged elections.
      The events of 6 January were entirely foreseeable and consistent with the Trump we saw from 2015. The Republican party knew exactly who Trump was when they nominated him for president and then enabled him throughout his term and beyond.Magi Young Exeter More

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      Trump triumphant – but senior Republicans still see battles ahead

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      Donald Trump emerged from his second impeachment trial almost completely politically intact. But amid widespread laments (or celebrations, depending on the affiliation of the speaker) about the former president’s grip on the Republican party, some prominent voices suggested a changing of the guard may still be due.“Losing the bully pulpit is a big difference,” Senator John Cornyn of Texas told the Hill, of Trump’s ejection from the White House and from major social media platforms, in the aftermath of the US Capitol attack.“I think that [we’re] already beginning to see some groundwork being laid by other people who aspire to succeed him.”By a vote of 57-43, the Senate voted to convict Trump on the charge that he incited the mob assault on the Capitol on 6 January. Seven Republicans joined every Democrat and independent in a verdict which would have barred Trump from running for office again. But the vote did not pass the two-thirds votes required.Only one Republican, Mitt Romney, defected in Trump’s first impeachment trial last year. But as Trump’s supporters brushed off the stronger show of opposition inside the party, so did Trump himself.The former president will be 78 in 2024 and has not committed to running again. But his post-acquittal statement did preview a resumption of a more visible role in US politics in the coming months.“Our historic, patriotic and beautiful movement to Make America Great Again has only just begun,” Trump said. “In the months ahead I have much to share with you, and I look forward to continuing our incredible journey together to achieve American greatness for all of our people. There has never been anything like it!”In interviews on Sunday, Republicans who dared to turn against Trump were asked about the likely consequences of their votes.In Louisiana, the state Republican party voted to censure Senator Bill Cassidy, who the chair of the Louisiana Republican Caucus warned not to “expect a warm welcome when you come home to Louisiana!”Speaking to ABC’s This Week, Cassidy said: “I’m attempting to hold President Trump accountable and that is the trust that I have from the people who elected me and I am very confident that as time passes people will move to that position.”Trump’s allies argued that he remains the center of the Republican universe.“Donald Trump is the most vibrant member of the Republican party,” Senator Lindsey Graham of South Carolina, a close Trump ally, told Fox News Sunday. “The Trump movement is alive and well.”Jason Chaffetz, a former congressman from Utah, framed the impeachment as a quixotic Democratic failure.“I don’t think history will treat this very well,” he told Fox. “It didn’t have the legitimacy that Democrats hoped it would. They really didn’t sway anybody. I think it was a complete waste of time and now Democrats are 0 for 2 and America wants to move on.”At the same time, there are indications that unity remains elusive within Republican ranks. In an interview with Politico, Mitch McConnell of Kentucky, the Senate minority leader who excoriated Trump after the impeachment trial but nonetheless voted for acquittal, indicated he would wade into primaries in which a Trump-backed candidate seemed set to win.“My goal is, in every way possible, to have nominees representing the Republican party who can win in,” McConnell said. “Some of them may be people the former president likes. Some of them may not be. The only thing I care about is electability.”McConnell added: “I’m not predicting the president would support people who couldn’t win. But I do think electability – not who supports who – is the critical point.”Graham indicated how McConnell’s Senate speech had gone down among Trump supporters.“He got a load off his chest,” he said, “obviously, but unfortunately he put a load on the back of Republicans. That speech you will see in 2022 campaigns.[embedded content]“I would imagine if you’re a Republican running in Arizona or Georgia, New Hampshire, where we have a chance to take back the Senate, they may be playing Senator McConnell’s speech and asking you about it as a candidate. And I imagine if you’re an incumbent Republican, they’re going to be people asking you, ‘Will you support Senator McConnell in the future?’”Close allies of Trump are running for major offices in those next midterms. In Arkansas, former White House press secretary Sarah Sanders is vying for the Republican nomination for governor. In North Carolina, Graham suggested, Lara Trump, the former president’s daughter in law, may well run for Senate to replace Richard Burr, the retiring senator who voted to convict Trump.There is also talk that Ivanka Trump could run for Senate in Florida, challenging Marco Rubio.Prominent anti-Trump figures see conflict ahead. Larry Hogan, the governor of Maryland who is widely expected to mount a presidential run in 2024, said anti-Trump sentiment would continue to grow.“We’re only a month in to the Biden administration,” Hogan told CNN’s State of the Union. “I think the final chapter of Donald Trump and the Republican party hasn’t been written yet.” More

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      Lindsey Graham: Burr impeachment vote boosts Lara Trump Senate hopes

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      Richard Burr’s vote to convict Donald Trump did not bring down the former president but it may have made Lara Trump “almost certain” to be nominated for the US Senate, key Trump ally Lindsey Graham said on Sunday.“Certainly I would be behind her because she represents the future of the Republican party,” the South Carolina senator said of the former president’s daughter-in-law, adding that the future should be “Trump-plus”.Burr, a former chair of the Senate intelligence committee, will retire as a senator from North Carolina at the end of his current term.On Saturday, he and six other Republicans voted to convict Trump on a charge of insurrection linked to the US Capitol attack. It made Trump’s second impeachment the most bipartisan ever but he was acquitted nonetheless.Burr’s state Republican party condemned what it called his “shocking and disappointing” vote.Lara Trump is married to Eric Trump, the former president’s second son. She has been reported to be interested in running for Senate in her native state.“The biggest winner I think of this whole impeachment trial is Lara Trump,” Graham told Fox News Sunday. “My dear friend Richard Burr, who I like and I’ve been friends to a long time, just made Lara Trump almost a certain nominee for the Senate seat in North Carolina to replace him if she runs.“Now certainly I would be behind her because she represents the future of the Republican party.”In 2016, Graham famously predicted Trump would “destroy” the GOP if he was made its nominee for president. Once Trump won power, the senator switched to become one of his biggest boosters.On Sunday, in an interview in which he occasionally spoke directly to the former president, he said his party should be “Trump-plus”, because “the most potent force in the Republican party is President Trump”.“And at the end of the day I’ve been involved in politics for over 25 years,” Graham said. “The president is a handful and what happened [at the Capitol] on 6 January was terrible for the country. But he’s not singularly to blame. Democrats have sat on the sidelines and watched the country being burned down for a year and a half and not said a damn word, and most Republicans are tired of the hypocrisy.”On Saturday, Graham first voted against the calling of witnesses in the impeachment trial, then switched to support it. After a deal was done to avoid that step, he voted to acquit.Other Trump family members have been linked to runs for office. For example, the Florida senator Marco Rubio is widely expected to face a primary challenge from Ivanka Trump, the former president’s oldest daughter.Lara Trump, 38, is a former personal trainer and TV producer who became a key campaign surrogate. Among other controversies, she claimed Joe Biden was suffering “cognitive decline” and mocked his stutter. She earned widespread rebuke.“These words come without hesitation,” Chesley “Sully” Sullenberger, the airline pilot and all-American hero who also stuttered as a child, wrote in the New York Times.“Stop. Grow up. Show some decency. People who can’t have no place in public life.” More