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Hedge fund chiefs to testify before Congress on the GameStop saga

Two of Wall Street’s top hedge fund managers are expected to testify with the managing directors of Reddit and Robinhood at next week’s U.S. Congressional hearing on the market turmoil surrounding trading in GameStop actions.

On Friday evening, the House of Representatives financial services committee announced the list of high-level witnesses. It features Ken Griffin of Citadel and Gabe Plotkin of Melvin Capital, as well as Steve Huffman of Reddit and Vlad Tenev of Robinhood.

The committee added that Keith Gill, the trader known as “Roaring Kitty” who has become one of the main players in the GameStop Rally which attracts political attention, would also appear.

The hearing, which will take place in Washington on Thursday, will be chaired by Maxine Waters, a veteran California Democrat and longtime critic of the financial services industry. The title of the audience will be “Game Stopped? Who wins and loses when short sellers, social media and retail investors collide ”.

Testimonials in Congress from senior financial services executives are fairly common, but it’s rarer for the best hedge funds and private equity executives to be burnt out on Capitol Hill.

The political attention of stock trading has increased sharply in recent weeks. This came after a rally in GameStop shares that was driven by retail investors who were active on the social media platform Reddit. They challenged hedge funds that bet on the video game retailer’s shares to fall.

When Robinhood, the online trading platform, interrupted negotiation in GameStop due to volatility it fueled a backlash among retail investors joined by populist politicians on the right and left who said it offered proof that the financial system was skewed in favor of its biggest players.

GameStop shares, which peaked at $ 347.51 on January 27, have since fallen and closed at $ 52.40 on Friday. Even though trading in GameStop stocks stabilized, lawmakers and regulators in Washington decided to investigate whether the episode was due to market manipulation or other systemic issues in the financial system.

Last week, Janet Yellen, the US Treasury Secretary, called a meeting of leading regulators, including the Securities and Exchange Commission and the Commodity Futures Trading Commission, saying that “the basic infrastructure of the market is resilient” but that the SEC would publish a “timely study” of the events.

In addition, the SEC and CFTC will “examine whether business practices are consistent with protecting investors and a fair and efficient market.”

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