Patrick McHenryChairman

Washington, June 24, 2022 -

Today, the top Republican on the House Financial Services Committee, Patrick McHenry (NC-10), issued the following statement in response to Committee Democrats’ report regarding the “meme stock” event of January 2021:

“I first called for a hearing on the GameStop situation to understand the facts on the ground,” said Republican Leader McHenry. “This was an opportunity to explore ways to open up markets and provide more opportunities for everyday investors to participate. Instead, Committee Democrats saw a chance to use partisan conspiracy theories to push an agenda that makes the stock market less accessible. Now, nearly 17 months later, there is still no evidence of collusion between market makers and broker-dealers, and the Democrats continue to ignore the fact that the underlying infrastructure of the market performed well during the meme stock event. We should be focused on finding ways to modernize the market and level the playing field.”

Committee Republican staff also released a memorandum to correct the record in response to false allegations from Democrats who embraced conspiracy theories about the underlying causes of the meme stock event before the Committee’s investigation.

Key Excerpts from the Memorandum:

“Today, the Chairwoman issued a staff report that purports to represent the Committee’s 17-month investigation of the “meme stock” event of January 2021. Contrary to the findings and recommendations contained therein, the documents and testimony obtained in the course of the Committee’s investigation show the core infrastructure of the securities market remained resilient despite the extraordinary volatility related to meme stocks in January 2021. This memorandum supplements the Chairwoman’s report and corrects the record as necessary.

“The evidence shows retail investors are participating in the securities market at record levels, and new market participants tend to be younger and more diverse with comparatively lower income and household wealth than the industry as a whole. Those trends correlate with the prevalence of modern brokerage features such as zero commission trading and the ability to buy fractional shares, among other things.

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“Rather than embrace innovations that made investing more accessible, Democrats are leveraging public outrage about trading restrictions imposed by several brokerages during the meme stock event to push policies that make investing more expensive and less accessible for everyday investors. In fact, the effort to sow doubt about PFOF [Payment for Order Flow] started well before the meme stock event and increased immediately, when Democrats alleged without evidence that a market maker colluded with Robinhood to protect its bottom line.

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“Before the Committee obtained the first shred of evidence, Democrats rushed to amplify conspiracy theories... Now, after the Committee’s 17-month investigation, Democrats continue to misrepresent certain key facts to justify policies to end zero commission trading and other practices that made investing more accessible.

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“Indeed, the documents and testimony obtained by the Committee since January 2021 show the antiquated system that facilitates the securities marketplace should be modernized to better serve the growing number of retail investors. Moreover, conditions in the current marketplace are such that retail traders are participating at record levels, especially young and diverse investors with lower income and household wealth. Any proposals to reform the relationship between investors and their brokerages should be evidence-based and intended to preserve the dynamics that democratized the retail investment marketplace in the first place.

“Specifically, the evidence shows a shorter period for settlement of securities transactions may have prevented the need for many of the trading restrictions during the meme stock event and reduced overall risk to the securities clearing system. Congress and the SEC should expedite the effort to modernize the settlement process along those lines.”

Read the full memorandum here.

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