Robinhood CEO Criticizes ‘Runaway Chain Reaction’ of Short Sales
(Bloomberg) -- Robinhood Markets Chief Executive Officer Vlad Tenev said short selling the same shares multiple times is creating a chaotic dynamic for markets and investors.
When a stock is being borrowed over and over it “creates some sort of runaway chain reaction,” Tenev said at the New York Times DealBook DC Policy Project virtual conference Tuesday. “How many times should we let the same share be shorted? I think there’s an argument that the answer should be one.”
It’s worth looking at “how things would be different if there was some limitation,” he said. Tenev was joined in the session by former U.S. Securities and Exchange Commission Chairman Jay Clayton, who called for real time disclosure of shorts.
Robinhood has come under fire for restricting trading of volatile stocks including GameStop Corp., setting off outrage among its customers. A band of traders from a Reddit forum joined forces to drive up shares of several heavily shorted stocks, causing billions of dollars of losses for hedge funds.
After Robinhood’s intervention, wary day traders accused the firm of protecting hedge funds that stood to lose during the short squeeze. Tenev denied that during a hearing convened by the House Financial Services Committee last week and apologized to Robinhood customers.
On Monday, the Menlo Park, California-based company said it plans to build up its phone-based customer service to better handle questions and complaints.
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