WATCH: CNBC’s Andrew Ross Sorkin Grills Robinhood CEO Amid Massive Uproar Over Trading Freeze in GameStop, Other Skyrocketing Stocks
CNBC’s Andrew Ross Sorkin grilled Robinhood CEO Vlad Tenev Thursday over the brokerage app’s much-criticized decision to cut off trades amid the chaos concerning GameStop and other companies.
Robinhood received a great deal of bipartisan condemnation, even from lawmakers, for the trading freeze, with many recalling when the company tweeted back in 2016, “Let the people trade.”
Let the people trade.
— Robinhood (@RobinhoodApp) March 23, 2016
So Sorkin put Tenev on the spot about the massive backlash toward Robinhood and asked him why his company had restricted the ability for his clients to do anything but sell shares in some of the recently boosted stocks.
“There are, frankly, as you know, a lot of angry customers out there and a lot of questions about what took place and the decisions that you made to limit so many of your customers’ ability to buy stocks like GameStop, questions about whether you have a liquidity problem, whether you’re trying to protect them from themselves, whether Citadel did this,” Sorkin said, referring to a large hedge fund that was exposed to massive losses because of the sudden stock surge. “Explain what happened today.”
Tenev said it was a “very difficult decision” and responded what he categorized to as “misinformation” surrounding it.
“We absolutely did not do this at the direction of any market maker or hedge fund or anyone we route to or other market participants,” he insisted.
As he talked about the current market volatility, Tenev said, “We’re really in unprecedented times, and in order to protect the firm and protect our customers, we had to limit buying in these stocks.”
Sorkin jumped in to say again it sounds like he’s suggesting “a liquidity problem inside the firm.”
“There’s no liquidity problem, and to be clear, this was done preemptively, so we did this proactively,” Tenev responded. “We’re doing what we can to allow buying and to remove these restrictions in the morning.”
He said it “pains” the company to impose these restrictions in the first place, but Sorkin asked in response: “What do you tell the Robinhood investor who says ‘Look at the screen, I’m losing money, you are not allowing me to buy this, and, by the way, I’m going to have to sell it for less money because of what you did’?”
Sorkin even asked about customers who are so angry at Robinhood they might just go to another service entirely.
You can watch the full interview above, via CNBC.
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