It's a bad week to be on Dave's list. Amirite, Commissioner Goodell?
On Friday we got a blast from Davey Day Trader's past.
Remember Vlad Tenev, the founder and CEO of Robinhood who played God in early 2021?
If 'rona boi wiped your memory clean, allow me to remind you.
In January 2021, a bunch of crayon eaters on Reddit, led by Keith Gill aka Deep Fucking Value, banded together to send shares of GameStop to the moon. This sparked what's known as a short squeeze, which totally fucked hedge funds/other Wall Street institutions I'm not smart enough to work at, and sent shares even higher. That is until Vlad's Robinhood suddenly stopped allowing retail investors, many of which used RH, to buy shares of certain "meme stocks," including GameStop. The move was the nail in the movement's coffin.
In what is probably just a total coincidence, Robinhood makes most of its money selling its order flow (aka your trades) to companies like Ken Griffin's Citadel. Ken is basically Gordon Gekko meets Mr. Burns (fun fact: Ken once outbid a group of crypto nerds for a copy of the Constitution because his son told him to). He's incredibly wealthy, well-connected, and sketchy as fuck. And some of Ken's pals were the hedge funds getting beat up by pikers like you and me. Accusations ran rampant that Ken had forced Vlad to stop the bleeding (note: this is still up for debate).
The shit storm caught the attention of the media, including Davey Day Trader Global:
Lawmakers paid attention too. Pretty much all the players including Vlad, Deep Fucking Value, and Ken Griffin took the stand in what was arguably the best Congressional hearing since Michael Corleone took the stand in 'Godfather 2'. And on Friday, 18-months after the fact, the House Financial Services Committee dropped an absolute unit of a report calling bullshit on some of Vlad's claims.
Throughout his post-decision PR full court press Vlad vehemently denied that the company was having liquidity issues during the GameStonk drama. That was despite raising more than $3B from investors basically overnight to meet collateral requirements from RH's clearing house. But his public comments didn't align with what was happening internally according to the recent report. Tenev wrote an email to his CFO about making sure the company "stays green." Even more damning was a text sent from the President of the Securities division to RH's COO referring to a "huge liquidity issue." Lock him up.
Now I'm not a lawyer, but I did pass B-Law 101, and I'm pretty sure if Vlad lied to Congress he committed perjury… which means he and Goodell might be doing their best to not drop the soap at this time next year.
Of course, since karma's a bitch and all, Vlad has already had to witness his life's work vaporize in front of his face. Shares of Robinhood are down nearly 75% from their IPO price. Oh, and yesterday news broke that crypto brokerage FTX is considering a takeover of Robinhood.
Snap necks and cash checks,
PS, IF YOU WANT MORE FINANCE NEWS AND COMMENTARY, CHECK OUT THE FAMILY OFFICE. LARGE AND I TALK MARKETS AND ARE INVESTING $5,001 OF OUR OWN MONEY FOR YOUR ENTERTAINMENT. WATCH EPISODE 3 NOW (SPOILER ALERT: WE DOUBLED OUR MONEY ON A REVLON TRADE).