Gamestop Hearings Announced: Lawmakers Investigate Online Trading

The unusual trading activity surrounding GameStop has prompted Congressional interest, with discussions already leading to planned hearings on the matter.

Representative Maxine Waters (D-CA), who leads the House Committee on Financial Services, revealed intentions to investigate the circumstances, referencing past instances of what she described as “harmful practices” by certain hedge funds.

While not specifically mentioning Robinhood or other similar services, Waters indicated that an upcoming hearing will examine the broader financial consequences of short selling, the use of “gamification” techniques, and the role of online trading venues. The specific date for this hearing remains to be determined.

Waters emphasized that it is the duty of legislators and financial regulators to prevent such potentially damaging and manipulative behavior, and to maintain fair, stable, and effective capital markets, protecting investors in the process.

On the Senate side, Sherrod Brown, the future Chairman of the Senate Banking Committee, announced his own plans for a hearing to discuss the “present condition of the stock market” in relation to these recent developments. Brown stated that those in the financial industry tend to prioritize rules only when they themselves are negatively affected.

Earlier in the day, Democratic Representatives Rashida Tlaib, Alexandria Ocasio-Cortez, and Ro Khanna all voiced criticism of Robinhood for temporarily suspending certain trades during the period of increased market fluctuation driven by individual investors coordinating through Reddit. E-Trade, which is owned by Morgan Stanley, subsequently took a similar action.

Senator Ted Cruz of Texas, a Republican, expressed similar concerns regarding Robinhood’s decisions, demonstrating that lawmakers from both parties are prepared to scrutinize technology companies, even alongside ongoing debates about pandemic relief and impeachment proceedings.

Beyond Congress, New York Attorney General Letitia James also released a statement on Thursday, confirming that her office is “looking into the issues raised concerning activity on the Robinhood application” and will be conducting a review of the situation.