Court records spark new GameStop Citadel-Robinhood theories
On Monday evening, Citadel Securities broke its months of silence on Twitter to respond to rumors circulating on social media that CEO Ken Griffin lied to Congress about his actions leading to the temporary halt of GameStop transactions on Robinhood in late January.
GameStop’s investment craze has been largely characterized by retail investors imagining they are hurting hedge funds and short sellers. For months, countless theories and accusations have insisted that Citadel was behind Robinhood’s decision to stop trading on the 28th after other brokerages ceased trading earlier in the year. week. The central axis of the theory is based on two relationships: that Robinhood received more than 35% of its revenue last year ($ 39 million) from Citadel Securities, which pays the app for a stream of transactions from its users before they are executed, and Citadel has helped bail out GameStop short seller Melvin Capital when he started to feel the pressure.
Robinhood and Citadel have denied this theory, including under oath during Congressional hearings.
The last wave of rumors dates back to a document filed in a class action lawsuit against brokerage firms including Robinhood and market makers including Citadel Securities in U.S. District Court for the Southern District of Florida on September 22. The complaint details conversations within Robinhood on January 27, one of Gamestop’s trading days that was interrupted by various brokerages, as well as conversations between Robinhood and Citadel Securities.
The lawsuit alleges that on January 27, “senior employees of Citadel Securities and Robinhood had numerous communications with each other indicating that Citadel pressured Robinhood.” Robinhood COO Gretchen Howard reportedly told CEO Vlad Tenev at Slack that she and other Robinhood executives, including Jim Swartwout, got a 5 p.m. call with Citadel.
Later that day, Robinhood Securities President and COO Jim Swarttwoth said in an internal conversation: “You wouldn’t believe the conversation we had with Citadel, the total mess.”
Later that night, the lawsuit alleges that an appeal was made between Tenev and a redacted person from Citadel Securities. The lawsuit notes that Swartwout later said, “I have to say I’m more than disappointed with the way this turned out. It’s hard to have a partnership when things like that happen.
The allegations coalesced into a hashtag targeting Citadel CEO Ken Griffith: #KenGriffithLied, which gained momentum on Monday afternoon, when Citadel insisted it “didn’t ask” to Robinhood or any company to restrict or limit business activities on January 27.
Citadel Securities went on to say that it was “the only major market maker during this time to provide continuous liquidity every minute of every trading day.” Another tweet adds that Ken Griffin and Vlad Tenev “have NEVER met or spoken”. The company also tweeted a music video of Griffin telling Congress he had not asked Robinhood to restrict trade, adding that he had said “really”.
At two points in the trial, he mentions that Tenev allegedly asked to speak to Griffith, precisely because the two had never met, “not specific to this crazy issue.” The trial does not say that this meeting materialized. In any case, Citadel’s tweets and this lawsuit document have breathed new life into a series of conspiracy theories that have cropped up here and there over the past few months. It should be noted that Robinhood disclosed in its S-1 file for an initial public offering that it is currently under investigation by state, local and federal regulators for its role in the GameStop mess and for the stop trading.
Still, that hasn’t stopped people from speculating, and Citron’s return to Twitter has only fueled the flames. A quick glance at #KenGriffinLied and another hashtag it spawned (#KenGriffintoJail) reveals it.
The best result remember readers of 2015, the year Citadel achieved market maker status and the same year the Shanghai Stock Exchange banned the company from trading for four years for “malicious short selling.” Others took to Mocking Griffin, claiming his imprisonment, reminders to his testimony, and celebrate leaks and trending topics.