Today, Congresswoman Maxine Waters (D-CA), Chairwoman of the House Committee on Financial Services gave the following statement at a full Committee virtual hearing entitled, “Game Stopped? Who Wins and Loses When Short Sellers, Social Media, and Retail Investors Collide.”
Good afternoon everyone. This hearing will be the first in a series of hearings for the Committee to examine the recent market volatility involving GameStop and other stocks. I want to know how each of the witnesses here today, and the companies they represent, contributed to the historic trading events in January.
This recent market volatility has put a national spotlight on institutional practices by Wall Street firms, and prompted discussion about the evolving role of technology and social media in our markets. These events have illuminated potential conflicts of interest and the predatory ways that certain funds operate, and they have demonstrated the enormous potential power of social media in our markets. They have also raised issues involving gamification of trading, potential harm to retail investors, and the business models of apps with retail investors as their users.
All of this is why we have witnesses from many of the key players here to testify today, including witnesses representing Wall Street firms Melvin Capital and Citadel, social media company Reddit, trading app Robinhood, as well as one of the retail investors involved. In subsequent hearings we will hear from regulators and other experts regarding these events, including why Dodd-Frank rulemakings related to short-selling disclosures were never implemented.
Many Americans feel that the system is stacked against them, and no matter what, Wall Street always wins. In this instance, many retail investors appeared motivated by a desire to beat Wall Street at its own game. And, given the losses that many retail investors have sustained as a result of volatility in the system, there are many whose belief that the system is rigged against them has been reinforced. Others have noted that there are winners and there are losers on every trade in our financial markets. Our role, as the Financial Services Committee, is to ensure fairness in our financial markets and system, robust protections for investors, and accountability for Wall Street.
Today we will hear firsthand from the witnesses regarding these events. The hearing will be an opportunity for this Committee to get the facts about the role each of the entities the witnesses represent played in the events we are examining today.