WASHINGTON– On Thursday, U.S. Rep. Cindy Axne, D-Iowa, joined her colleagues on the House Financial Services Committee to conduct a hearing on recent market volatility related to purchasing of viral stocks through online trading platforms.
Axne, a member of the Financial Services Subcommittee on Investor Protection, shared her own family’s experience with the Gamestop stock trading frenzy that took place on the trading platform Robinhood.
“Last month, of course, we saw this volatility with Gamestop and AMC, and the stocks started to rally, everyone seemed to get involved…that includes people like my nephew and his two friends who stayed up until four in the morning to see if they could get a piece of this action,” Axne said to Robinhood CEO Vlad Tenev. “Folks like my nephew aren’t your customers, they’re your product. Your customer is sitting right next to you…Mr. [Kenneth] Griffin of Citadel.”
Drawing from her experience working in user interface design through the digital design small business she owns with her husband, Axne focused on Robinhood’s gamification of the stock market through various features like offering free stocks for referrals and through contests.
“When people sign up, they get a scratch-off ticket to see what they get, confetti falls every time they place an order, they get push notifications, they’re encouraged to trade, if their friend signs up they get a free stock,” she said. “Why have you added specific gaming design elements to look like gambling to your app?”
Axne also focused her time at the hearing on what the increased interest in these particular stocks says about income inequality in the U.S.
“One of the most concerning pieces…of this whole episode is how many people really felt like that’s what they needed to do to get ahead. To me, this just exemplifies the income inequality across America,” she said. “Right now, what I’m seeing is gambling on the stock market – and that’s not a real solution to that income inequality.”
In her questioning, Axne cited a Yahoo-Harris Poll study that found that nearly 30% of American adults surveyed reported that they bought stocks of Gamestop and other viral stocks last month.
The hearing was attended by:
- Vlad Tenev, Chief Executive Officer, Robinhood Markets, Inc.
- Kenneth C. Griffin, Chief Executive Officer, Citadel LLC
- Gabriel Plotkin, Chief Executive Officer, Melvin Capital Management LP
- Steve Huffman, Chief Executive Officer, Co-Founder, Reddit
- Jennifer Schulp, Director of Financial Regulation Studies, Cato Institute
- Keith Gill, a Reddit user involved with the Gamestop trading frenzy