FUNDS EXECS TO TESTIFY ON GAMESTOP STOCK TRADING BROUHAHA

The chief executive officers of Robinhood, Citadel, Melvin Capital and Reddit will testify before the US House Financial Services Committee on Feb. 18 on the trading turmoil in GameStop Corp and other stocks, the panel’s chairwoman, Representative Maxine Waters, said.

The committee is examining how an apparent flood of retail trading drove certain stocks to extreme highs, squeezing hedge funds like Melvin that had bet against those shares, Eric Beech reported for Reuters.

Retail traders used a Reddit forum to promote the large-scale buying of GameStop, pushing prices higher and compelling hedge funds to suffer losses as they bet against those shares, which were either skidding of lacked fundamentals to gain a bigger slice of the trade.

To stanch the extreme speculation on GameStop shares, Robinhood eventually limited the volume and value of trades and other players responded by cashing in on their holdings, and dampening demand.

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