- Things got heated during a Congressional hearing into January’s Gamestop stock trading frenzy on Thursday.
- Rep. Brad Sherman accused Citadel CEO Ken Griffin of evading his questions.
- Sherman was asking Griffin if certain brokerages receive better prices from his firm.
- Visit the Business section of Insider for more stories.
Rep. Brad Sherman accused Citadel CEO Ken Griffin of “wasting his time” during a Congressional hearing about January’s GameStop stock trading frenzy on Thursday.
Sherman, a Democrat from California, became heated and interrupted Griffin multiple times as he questioned the executive if Citadel gives better prices to certain brokerages, like Robinhood and Fidelity, to execute their trades.
Griffin began answering the question by explaining the quality of Citadel’s execution varies by how the order comes in and the size of the order received. Sherman said Griffin did not answer his question directly, and instead avoided answering by “making up other questions.”
“You are doing a great job of wasting my time,” Sherman said. “If you’re going to filibuster you should run for the Senate.”
The House Committee on Financial Services called the hearing after individual investors caused GameStop shares to surge, in part to burn funds that bet against the stock. Citadel was among the biggest losers in January during the GameStop frenzy after the firm reported losing 3% of its assets under management.
The nature of Robinhood’s business model was a major focus of the hearing. Robinhood offers users commission-free trading by selling order information to market-making firms, such as Citadel Securities, which are required to best execute the orders and are able to split the profits of the trade — which can be less than a penny per order — with the brokerage firm.
Critics says this can cause a conflict of interest because market-makers will find better prices for certain brokerages they work with. Legendary investor Bill Gurley had called to ban payment order flow systems altogether during the GameStop saga.
Griffin said individual investors benefit when going through market makers.
“I think it’s important to recognize that we have vigorously advocated for execution quality to be one of the dominant decision-making factors providing order flow in the United States,” he said in the hearing. “This has saved retail investors billions of dollars over the years in contrast to the executions that they would receive through other execution strategies.”
Sherman’s office was not immediately available for additional comment.
Bradley Saacks contributed to this report.
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