'Meme stock' report shows Robinhood had worse liquidity issues than first known
The House Financial Services Committee on Friday issued a long-awaited report on the “meme” stock phenomena, shining new light on pressures faced by retail brokerages, including Robinhood Markets Inc., during the height of the trading frenzy.
Now, investors have another chapter in the saga to read, courtesy of a congressional hearing and an 18-month-long investigation that culminated Friday with the release of the House Financial Services Committee’s report on the episode. Internal Robinhood communications, cited in the report, paint a different picture. They show initial concerns about liquidity by CEO Tenev, Chief Financial Officer Jason Warnick, Chief Operating Officer Gretchen Howard and Robinhood Securities President Jim Swartwout, turning into extreme alarm by the morning of Jan. 28, when it became clear the firm was in danger of being cut off by its clearinghouse for falling short of its collateral requirements.
Prior to the waiver, some fears were raised about the possibility of Robinhood being subject to a forced sale or into bankruptcy, in a similar fashion to Lehman Brothers in 2008 and MF Global in 2011.
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