Representative Alexandria Ocasio-Cortez told Robinhood Chief Executive Officer Vlad Tenev that his firm’s faulty business practices undercut its promise of free trades, while urging him to share revenue it makes selling stock orders with customers.
“Robinhood owes its customers a lot more than an apology because it has harmed their interests,” the New York Democrat and progressive icon said by video at Thursday’s House Financial Services Committee hearing on wild market swings in shares of GameStop Corp. and other stocks. She accused Robinhood of providing investors poor execution and lost rebates, adding that that makes its popular app far from free.
Tenev pushed back, arguing Robinhood’s platform has dramatically lowered the cost of trading for retail investors, something its been able to do by selling customers’ orders rather than charging commissions. He wouldn’t commit to sharing its proceeds from payment for order flow arrangements, adding that Robinhood needs to generate revenue because it’s a for-profit business.
“Robinhood forced the entire industry to drop commissions and replicate our business model,” he said in an exchange that came five hours into the hearing.
{{/usCountry}}“Robinhood forced the entire industry to drop commissions and replicate our business model,” he said in an exchange that came five hours into the hearing.
{{/usCountry}}Ocasio-Cortez’s inquiry came just after her fellow Democrat and member of the so-called squad of progressives, Rashida Tlaib of Michigan, said in a tense exchange with Citadel Founder Ken Griffin that taxing stock transactions would discourage dangerous speculation caused by high-frequency trading.
Griffin disagreed, saying “a transaction tax will injure Americans hoping to save for retirement.”