It certainly has been a heck of a week for Robinhood Securities. The company took Wall Street by storm in 2020 and the better part of 2021 with a massive influx of users, with things heating up in January of this year. The company has long championed themselves as the place for novice and smaller investors to get their start in the market. With no commission trades and support for fractional share ownership, Robinhood became one of the places to be for many meme stock investors. On January 28, 2021, Robinhood and several other broker dealers shut off the ability for their clients to buy stocks like GameStop, AMC, BlackBerry, and more as they all were in the midst of massive parabolic short squeeze moves to the upside. Many of the investors that were harmed by these actions have not forgotten that day, and many rumors have swirled about potential collusion between Robinhood and their market maker Citadel Securities. Last night, Robinhood issued a statement to unusual_whales stating that "these complaints attempt to create a false narrative of collusion."
We have confirmed with Head of Robinhood Comms Nora Chan that she did indeed send that statement via email. Here's the transcript of the entire statement that was sent to @unusual_whales:
"These complaints attempt to create a false narrative of collusion, and we will work vigorously to continue correcting the record with the facts. In times of market stress, it’s normal and advisable for us to communicate even more with our market centers. In the context of January 28, Robinhood Securities was communicating with market makers in an effort to ensure continued market access for our customers. At no point did Citadel or any other market maker pressure the business to move any securities to position-close only."
Last night's statement from Robinhood comes on the back of three separate social media outbursts from their market maker Citadel Securities made during this week. First, Citadel responded to #KenGriffinLied. Then the company's CEO lashed out comparing meme stock investors to moon landing conspiracy theorists. Yesterday, Citadel addressed #CitadelScandal by rolling over on Robinhood, as they posted a screenshot of a conversation between the companies and blamed the $3 billion margin call for the events of January 28, 2021.
There have also been several rumors circulating on Twitter, YouTube, and Reddit regarding potential insider trading at Robinhood. It is worth noting that Nora did not refute any of these claims in her statement to unusual_whales. Robinhood (HOOD) went public with an IPO earlier this year, and has also been facing increased regulatory scrutiny over their Payment for Order Flow business model in the fallout of the events that went down in January 2021.
It's been a truly long week for GameStop, AMC, and other meme stock shareholders as they have watched Citadel Securities continue to post on Twitter after eight months of silence. As Nora Chan said in her email to unusual_whales, the company "will work vigorously to continue correcting the record with facts," but it is hard to ignore the fact that no statement about the Robinhood insider trading rumors has been made at the time this article was published.
As of now it really seems like Robinhood and Citadel are scrambling to move the goalposts. In the case of Citadel, Ken Griffin testified before Congress stating that no one at his company communicated with Robinhood about the decision to prevent users from buying meme stocks. Then the company tweeted out a screenshot of a conversation between the companies about that very topic. In the case of Robinhood, the company has denied any collusion in the decision to turn off the meme stock buy button on their app, and it is entirely possible that their incompetent risk-taking lead ended in a $3 billion margin call that forced their hands. With the rumors of insider trading still swirling around Robinhood, and meme stock investors still awaiting the SEC GameStop report, this story is not going away any time soon.
Keep it locked on Shacknews for all of the latest news surrounding the ongoing GameStop short squeeze and the accompanying fallout.
This article is only meant for educational purposes, and should not be taken as investment advice. Please consider your own investment time horizon, risk tolerance, and consult with a financial advisor before acting on this information.