tv Cavuto Coast to Coast FOX Business February 18, 2021 12:00pm-2:01pm EST
that is what they're going to be asking. that is the key question. you can see what is happening with those stocks now. most of them are down. neil cavuto is going to take it away with more on what's going to be happening with these hearings. he will lead us right up to it. neil, it is always yours. neil: you know it would actually make a great movie, wouldn't it, david? this warren guy, working at reddit a trader who might have undersold his real expertise. david: i will make a bet it will be a movie. it will be a movie. neil: no doubt, no doubt. at least a lot of people will attempt books on it. interactive brokers guys said we were close to collapse of our financial system. you have drama. goofy names. david: david and goliath. neil: you have got a bunch of politicians going to be judging them. like me judging whether you should eat a salad or not, david, which you don't have to
do ever. but you don't want them lecturing these guys on financial impropriety. it is tailor-made for a novel, movie or both. great job as always. hardest working guy in our building, david asman. let's look what we're looking at right now. the hearing, house financial services committee will kick off soon. a who's who players, heads of gamestop, we'll hear from sit is a dell, reddit, a host of others, melvin capital, all the players on all the sides. it will be virtual. announcing he was going which way congress seems to be hinting at. both republicans and democrats i should stress have been looking at this from different sides but all at weighing in and maybe regulating what can be extreme behavior here. so we're on that but first i do want to let you know we're also monitoring the power outages that remain in texas.
i'm told it is down to a few hundred thousand from better than 3 1/2 million this time yesterday. i don't know how accurate the figures are but they're expecting more bad weather. as you've seen what is happening to americans in new york city. we're getting a good deal of that in the new york metropolitan area. the fourth time in almost as many days. we're following that. we're following how the nation braces for that and higher prices come with that, and disruptions from everything from business activity to getting all the vaccines out. this goes on and on. first to hillary vaughn monitoring of that gamestop hearing. obviously hillary it is a lot more than gamestop, isn't it? reporter: neil, that's right, it is. things will get 90 and gritty in this hearing today. that might a problem of lawmakers of 54 person committee, all of them only eight directly traded stock in the last year. less than half even directly own stock themselves.
but still, these lawmakers are going to try to get to the bottom of who to blame over the frenzy over gamestop, to try to stop it from happening again. they will hear from all sides today but not from gamestop themselves. who has been the victim or victor in all of this, depending how you look at it. they will hear from robinhood ceo vlad tenev who will explain today half of their customers self-identify as first-time investors with average account size of $5,000. so the idea that their customers are unsophisticated day traders taking massive risks with large sums of money is wrong. they will tell the committee today. i want to be clear at the outset any allegation that robinhood act towed help hedge funds or other special interests to the debttry meant of our customers is absolutely false and market distorting rhetoric. instead he will blame two day trade settlements for clearinghouse deposit issues that caused them to pause some trading on the platform during the gamestop mania, recommend a
fix for that would be to get trades settled in real time. we'll hear from reddit's ceo who is expected to face some scrutiny if their platform engaged in market manipulation on the page wall street bets. their ceo will testify this. we have since analyzed act activity in wall street bets to determine whether bots, foreign agents played a significant role. they have not. lawmakers today will also hear from a gamestop investor who made a whopping $7.8 million off of gamestop. keith gill, who on line user name, roaring kitty is facing a class-action lawsuit in massachusetts alleging he pretended to be an amateur trader on line but is a licensed professional in real luff. gill will defend his bet on gamestop today. he believes wall street is oblivious what game stop has to offer. he will tell the committee today he is as bullish as he ever been on the stock. neil, this hearing will go on a
while. the hearing tells fox chairman waters does not have a hard out for this committee. she wants all 54 members to get their questions answered. we expect this to go on a while. neil? neil: all right. hillary, you're young, you will stay there all night. i have no doubt you will be on top of every little move. thank you, hillary, great reporting as always. we're seeing in the virtual hearing, maxine waters is already making an opening statement here. we're monitoring this but again this is all based on how far the government should go if it goes anywhere to police this sort of activity. i want to go to my buddy charlie gasparino first on this because no one has been over this story like he has or broken as much news about it. so, charlie, let me start with a base being question here. the government is looking into what happened here. the government is hearing what the interactive broker founder saying we were dangerously close to a collapse of our entire system. that usually generates talk of
regulation, oversight or more. where do you think this goes? >> definitely we're talking regulation. we're talking more oversight. we're talking more activist sec. we're talking about much, there will be more disclosures on short selling. there is going to be a policy reaction to this. there are always, meaning the whole frenzy around gamestop and a few penny stocks. the scandal though i think will evaporate today because the notion that the conspiracy theory somehow the little guys were getting screwed on purpose by robinhood because it has some business connection with big hedge funds like citadel who want to screw the little guys is so preposterous, you peel back the onion, one layer all you have to do, i think that is going to be put to rest. the bigger question i think is, does, we've turned investing into, there is something called
gameification of investing. that is the one of the labels of the hearing. should there be a policy response to that? you know my view as free marketer, the best policy response to that is what happened. people lost a lot of money here. some really big hedge funds. some small investors. when you lose money like that you bring back consequence to what you're doing. you get rid of mortgage hazard. moral hazard. the best response by the sec, it takes away that sort of moral hazard. by the way, it does, they should be doing nothing with short selling. if you know anything about the markets it is not the negatives that drive the markets. it is touters, people touting stock, telling kids to go out and get, borrow money so they can buy a company, a stock like gamestop, which by the way has seen its best days behind it. neil: yeah. sometimes not just kids though.
we're getting to the core, you were ahead of this, this is really about finding out, i think how brokerages get paid for trades. it comes down to the mechanics and the plumbing. how does that happen? how did it get all mucked up and backed up and frozen? i think what is going to reveal itself today, here is where the politicians might start falling asleep, they're expecting a like oliver stone financial version of jfk. in fact what they run across, this trade was put over to this computer. couldn't handle did the volume, then this happened. it starts sounding like you know, a very, very bad list of complicated mechanical directions and they all go to sleep. >> right, that could happen. when you get away from the conspiracy it didn't happen, it gets to the plumbing of wall street. robinhood allows the average investor, to trade for free, because it sells what is known as its order flow to another
broker who matches buyers and sellers and buys the order flow. it is valuable. they make the markets. by making market they can make money too. that is one thing. one thing we'll get used to hearing t-plus 2. how is that for an exciting topic? t-plus 2. that is the settle men time between the trades. it takes two days. those two days are interesting, that allows companies make sure trades are matched. vlad tenev we have technology to make it instantaneous. they should be. other people say well, if you make it instantaneous you can't short stocks. you can't short a stock because you need to borrow the stock. you see where this is going. your eyes, you're starting to fall asleep as i explain this. you can't borrow the stock. you can't short it. neil: that is just lunch, charlie. i want to bring danielle dimartino booth into this. i want to bring dan gel true into this.
danielle, i don't know how far this goes, i think charlie is right by his extension of my own, this will be a detail inside the weed kind of step by step recounting of what happened. a system simply overwhelmed. politicians of both parties will probably look more than that something more sexier than that, more sinister than that. i don't know they will get that though. what do you think? >> i think the politicians are in basically for financial market plumbing 101. to charlie's point, they will not enjoy where they are. they will have to have toothpicks to keep their eyes open. these are subject matters. they're boring. the fact that we used to use three days to settle trades, now it is two. do we have the technology to make it real time? these are valid issues to explore but in terms of nefariousness, if that is a word, they're not going to find
it. they just won't. if you think, if you think, neil, back to how bad enron was behaving and other companies that have been caught in fraud situations, at the end of the day the politicians will have to say, you know what? short sellers are really good. they're a good backstop. they're a good check and balance to use "politico" words on financial markets. there is something that is needed. again they're going down the wrong rabbit hole because there are, everybody who was in this chat room, everybody, big, small, in between, they all knew what they were doing. so, as far as the lawyers are concerned, you poll any securities attorney they will tell you how difficult it is to prove intent, even when you're dealing with full social media exposure, you can find out hot people are behind the bots an everything. this is going to be, i'm going to pull a janet yellen here, like watching paint dry.
the politicians will get what they are asking for. neil: sometimes i have watched paint dry -- beforehand, it is not awful, awful. but, dan, let me get your take what is at stake here. a lot of people were pushed to the brink. a lot of people to charlie's point, lost a lot of money. they were chasing the goose, the goose got away. they lost a lot of dough. normally when washington hears stories like that apparently we'll hear stories like that they have to protect the little guy. should the little guy, however you want to define he or she, should they know eyes wide open if something sounds too good to be true it is on them, it is not on the system that created this? >> well that is how it should be, neil, by the way i agrew with charlie said 100%. but let me tell you where he is
going wrong here. he is being logical. we're talking about congress. and what happened here is a great story. it is going to grab a lot of headlines. so even if there is nothing there, there is no conspiracy, there is no collusion. image of that has to be created so that, as you were alluding to, protecting the little guy from the big, bad, investors, those fat cats on wall street. maxine waters is already setting the tone what she is saying, there has been a long history of predatory conduct by these hedge funds. so she is establishing the tone of where this is going to go. this is going to be headline driven as opposed substance driven. and in the end what happened here, you had a bunch of investors whether they were
small guys or not, that got caught up in the emotion, they started chasing this shiny object and they got burned. so this is no different than being in the can soon know. you see the sign. bet with your head, not over it. people who were betting over their head they didn't know exactly what they were doing. they got burned. that is not the big guy or the hedge funds fault. now there are other issues to consider but that is not it. in the end, neil, the danger with this whole process is we land on overregulation which in effect going to end up hurting the retail investor in my opinion more than anyone else. neil: charlie, doesn't this come back to an environment where you take risks because you have no other choice, right? if rates are solo, if federal reserve accommodative as it has. >> right. neil: getting to 0%.
a little more now, with a back up in rates we've seen. this is the way to do it, when markets get very rich, you seek out other pockets. you make a beeline for the stocks that are shorted, you counter that. i noticed now they have funds around the 50 most shorted stocks that constantly change. that is a very popular vehicle but this environment breeds the type of activity for which we're having a hearing today? >> absolutely. by the way i can't wait for the scintillating conversation on the dtcc clearing and settlement process. when that comes i will be tuning in. let me tell you something. because that is part of this whole thing. how do stocks settle and how much capital you have to put up when stocks settle. i disagree with the prior guests. maxine waters has a real shot looking incredibly stupid here if she goes for the entire full monty of the, of the scandal. this is the little guy because it is so obviously, it is
obviously contradicted by the obvious facts. what you brought up, neil is salient, they won't get into, it is congress, when you have 0% interest rates, free checks to people over covid relief, people with at that time love time on their hands, throw the noxious brew together with 0% interest rates, people will gamble, look at investing as gamble. you can't make money in bank account, you buy a bond. you can't make any money in a bond you buy a junk bond. that goes on no stocks. apple is not good enough. roll the dice with gamestop. we have a lot of time on our hands to scour mess page boards and trade all day. that is what happened. one issue could come out of this something with robinhood's business model. as you know they were looking to do an ipo. we were first to report it is on
indefinite hold. i was told by people inside the company they have to get through this one piece before they even start talking to investment bankers so it is on hold. the business model of robinhood, robinhood has been a cultural phenomenon due to the pandemic. this is the place where people engaged in this risky behavior, this investing gameification, that might have to change. you could see that. i think that is the more likely out come than something sweeping because, let me tell you something, hedge funds lost a lot of money here. i don't know how you're going to tell melvin capital you screwed over the little guy when he was the guy losing all the money. i don't know how you tell robinhood you wouldn't let people trade when they didn't have the capital to handle the volume. you could maybe say they should have had capital. hindsight is always 2020. these things are us al belied by logic and the facts that if you think about what they could come up with, more disclosures on short selling i'm sure?
even though we need more short selling, not less in this market. something to do with robinhood's business model is possible. you know what is going to be interesting though, see how they go after ken griffin of citadel. this is where you might see them make some hay. ken griffin put together an investment empire people don't fully appreciate. he has got citadel hedge fund, he has citadel securities. they are huge players on both sides. i think they will try to go at if there is any conflicts there, making money on one hand, benefited the other, there are supposed to be two separate companies. people, i know ken griffin, okay? i know him because i've covered him for years. i know citadel but it is not a household name like a steve cohen is. it may soon become a household name. i hear they will hold his feet to the fire. that will be interesting to see what he says. i don't remember him at many hearings in the past. this is a first for him.
it will be interesting to see you who he deals -- neil: i will interresult you. i do want to dip in. robinhood ceo is now speaking here. we're trying to learn who, what, where, why, it happened it got a out of control for vlad tenev. let's listen in. >> mr. vlad, use your limited time to talk directly to what happened january 28th, your involvement in it? >> certainly. madam chair, madam chair, the witness has the opportunity to give their own testimony. >> you are not recognized, mr., please go right ahead and speak directly. mr. mchenry, yes of course. >> we created robinhood to economically empower all americans by opening financial markets to them. i was born in bulgaria, a
country were a financial system that was on the verge of collapse. at the age of five i immigrated with my family to america in search after better life. i have benefited from all america has to offer. and robinhood's mission to democratize finance for all has a very special significance for me. robinhood's platform allows people from all backgrounds to invest with no account minimums and zero commissions. contrary to some very misleading and highly uninformed reports we see evidence most of our customers are investing for the long term with features, fractional shares, recurring investments our customers can start with small amounts and grow investments in blue chip stocks and etfs over time. people always recognize the responsibility that comes with helping people invest. we'll continue to enhance our educational platform to help customers no matter where they are in their financial journey. hundreds of free educational
resources are available to everyone on our learn website right now. while markets fluctuate in tells me our business model is working for everyday americans. the total value of our customers assets on robinhood exceeds the net amount of money they have deposited with us by over $35 billion. this tells me our business model is working for everyday americans. the robinhood community. many people say that robinhood has helped them to pay car loans, reduce student loan debt, meet daily bills, save for the future and we're proud to serve them. you've invited me today to discuss the events of last month and i welcome this opportunity. in late january many brokerage firms saw massive increase in trading activity in a handful of stocks. prices were moving dramatically day-to-day, even hour-to-hour. one specific day,
january 28th -- complete unprecedented event. the spike in trading activity and volatility meant that robinhood securities, our clearing broker had to hold the line, post additional firm capital as collateral to support our clearinghouse deposit demands. to put it in perspective on january 28th our daily deposit requirement was 10 times more than on january 25th. as a result robinhood securities along with many other firms imposed temporary trading restrictions on certain securities. which allowed limited buys of these securities the following day. we have since lifted restrictions entirely. there are two points i want to make clear about these temporary restrictions first robinhood securities put the restrictions in place in an effort to meet increased regulatory deposit requirements, not to help hedge funds. we don't answer to hedge funds. we serve the millions of small investors who use our platform every day to invest.
second, robinhood immediately secured additional funds. all together through capital raising and other measures, we have increased our liquidity by more than $3 billion to cushion ourselves against increased collateral requirements and related market stress in the future. despite the unprecedented market conditions in january, at the end of the day what happened is unacceptable to us, to our customers, i'm sorry and i apologize. please know that we are doing everything we can to make sure that this won't happen again. i want to highlight one more thing. the existing two-day period to settle trades exposes investtores and the industry to unnecessary risk. there is no reason why the greatest financial system in the world cannot settle trades in real time. i believe we can and should act now to deploy our intellectual capital and engineering resources to move to real time settlement. together we can solve this before i close i want to
sincerely thank the millions of customers who continue to use robinhood to access the markets every day. we're grateful. committed to you. members. committee i appreciate the opportunity to answer your questions. >> mr. griffin you're recognized for five minutes to present your oral testimony. >> chairman waters, ranking member mchenry. neil: we'll continue to monitor this. i told you we would dive in and out as warranted where it was really important we would do this. right now kenneth griffin of citadel is speaking as well. i do want to let you know the robinhood ceo made an interesting comment, maybe how loathe they might be to see regulation start here. that is investors far from getting burnt are in the aggregate doing okay. they are making more money than they have lost to the tune of
$35 billion. i'm not aware over what time period he is going, probably since the inception of robinhood itself. producers, if you can indulge me again i do want to list to mr. griffin because it was citadel, the focus on its large hedge funds that are both on the short and long positions often times competing with one another, albeit in separate entities that is the source of all of this. i think charlie gasparino got it right, he might end up being more the focus and target of congress, particularly maxine waters than any of these other guys. i could be wrong, there is a big ol' target on his back. let's listen to his statement and how he plans to remove that target. >> in the late 1980s while attending college i traded stocks and options from my dorm room. my passion for investing led to my founding of citadel in 1990. today citadel is one of the world's leading alternative investment managers. capital partners include pension
plans, colleges, hospitals, foundations and research institutions. in 2002 my partners and i found citadel securities. today citadel securities is one of the world's premier market makers. we're a leader in using technology to transform our markets particularly for retail investors. citadel securities invests hundreds of millions of dollars each year to serve the needs of our customers. in the last week of january the importance of this investment was on full display. during the period of friended retail equities trading citadel securities was able to provide continuous liquidity every minute of every trading day. when others were unable or unwilling to handle the heavy volumes citadel securities was there. on wednesday january 27th,
we executed 7.4 billion shares on behalf of retail investors. to put into perspective on that day citadel securities executed more shares for retail investors than the entire average daily volume of the entire u.s. equities market in 2019. the orders of retail securities reflects the confidence of the retail brokerage community in our firm's ability to deliver in all market conditions -- underscores the critical importance of our resilient and stable systems. i could not be more proud of our team at citadel securities. my colleagues who are committed to insuring that the interests of america's retail investors were served during this extraordinary period. once again, i appreciate the
opportunity to appear today. i look forward to answering your questions. >> thank you, mr. griffin. mr. plotkin, you're now recognized for five minutes to present your oral testimony. neil: all right. i just want bring up, this is a significant development. i told you i want to make we're a little careful how we dodge and weave out of this, not to bore you to tears, to get the most important type of early testimony we can including all of these gentlemen's opening statements but in the case of citadel securities, i think charlie gasparino, had it right who is joining me right now he will be the focus of a lot of this here, even though he denied all the allegations that have been out there, robinhood limiting trading in some hot stocks was as a result of citadel forcing its hand making that happen. not quite so. you might try to explain that calmly, reminder there were other factors at play here, but again he is the rich guy. he is the richest of all the
guys making testimony today, charlie, and he's the guy they will say all right, you are a hedge fund guy. you make a lot of money. we know hedge fund guys, we don't know how you do it but you make an obscene amount of money and we think that makes you a better focus of attacks than some of these other players that worked to the advantage of the little guy. i don't know if it plays out exactly that way. i think i have an idea of the script. your thoughts? >> yeah. listen there is a lot of jealousy on wall street. a lot of people reached out to the committee, i know this fora fact, to say, point out conflicts of interest in ken griffin's business model. so the staff has been prepped for this and the staff preps the congress, the congress, the members, they have been well -- there was no shortage of back-stabbing from other wall street competitors of ken griffin and people who believe that he distorts the market through his various, by being a hedge fund, by being a
market-maker, by buying order flow but plenty of people who think payment order flow system is corrupt. that they flooded this committee with those statements. neil: that is her charge, right? sorry to interrupt but her crucial focal point on this citadel, particularly griffin at his behest, at his behest, the relationship with robinhood, the source of everything that appears evil here. she is -- i'm getting a sense that the house committee will be as well. >> yeah. because it, maybe but, listen, you, if you don't have payment for order flow, you can't do discount brokerage. charles schwab would not exist. neither will e-trade. certainly not robinhood. so i'm just saying if that is what you want, then you will take, you will annoy millions of people. just remember where you're going with that. there is no other way to pay for a discount brokerage to charge a
discount, very low fee for trading unless you have payment for order flow. that is how they make their money. one other thing here though, this is again, if this committee was intellectually honest here is where they would press vlad tenev. you're for t-plus 2. you're for eliminating t-plus 2, two-day settlement, making it instantaneous. why would you be for that? with technology we wouldn't have to put up money for people to trade and wouldn't have outages. yes. there is another reason he might be for that. robinhood does not like short selling okay? they are all about buying stocks, not short selling. short sellers are the antithesis of the robinhood trader. therefore if you get rid of t-plus 2, if it is instantaneous settlement there will not be short selling. that is good for his business model. so it is very self-serving. not one person will ask him that question because these guys don't know anything about the plumbing of the markets.
neil: you're getting back to the core of this whole thing which we're following, charlie. don't wander too far, my friend. >> i'm right here. neil: understanding what caused this to get frozen what caused mucking up in the process where people wanted to buy stock or sell, in this case gamestop, amc, a host of other players that were really battered down, heavily shorted by big firm including citadel i might point out. understand how it is why it is they couldn't get there, what is interesting here is that, at least in the maxine waters case, the woman who chairs this house financial services committee looking into this, her points are very closely mirror those of elizabeth warren in the senate that something nefarious was going on here and that hedge funds appear to be the start of it. what is interesting as well is that all of these guys are free to make opening statements. we might point out that robinhood's ceo in his opening statement was disrupted about a minute into it by the
congresswoman because she said that he wasn't entitled to essentially do what she had invited him to do, make an opening statement. he was able to continue it. that is a preview of coming attractions and what will be a very long cold day in washington. snow and icy weather nothing to do with it. ♪. ♪ ♪ ♪ ♪ ♪ ♪
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with no obligation to enroll. ♪. neil: dipping in right now, taking you live to steve haul ton, chief executive officer, co-founder of reddit, big player in this short squeeze, getting squeezed modern popularization of trading here. one of the things we're getting a handle on right now, really came up with the robinhood ceo, vladimir tenev, the argument that planned parenthood is there for common man, woman and trader, but whether in the process here, robinhood risks buying risky options, getting customers to do risky things, go
into debt to buy stocks. that it creates its own activity and creates the very bubble it says it has nothing to do with. now still early in this going here. i'm just telling from the direction and even the interruptions of opening statements no less, that that is where they might be taking this. that planned robinhood, the fams fictional star, might be for the common man, steal from the rich, give to the poor, but in this case, take from the poor to make them even poorer. we'll follow all of that. meantime following the weather in the country, because if think it is frosty in there, quite literally so particularly in texas, where hundreds of thousands are still without power. they're still trying to understand how that is. grady trimble right now in texas with more. grady? >> neil, it is impacting businesses across the state, including farmers and ranchers
where they have had no power or intermittent power for the last five or six days. they have had frozen water supplies. so they can't feed their cattle and other animals. they haven't been able to get their gear like tractors to get going because they're not used to having to start that kind of equipment in the cold. john paul deneen is a rancher here south of dallas. you have been dealing with lots of problems. so have your counterparts all over the southern part of the state. >> right. we're not equipped for this cold weather when it is zero grease. we've been seven days below freezing. our infrastructure is not made for that. i have to remind viewers these cows we see are food as well. ag commissioner for the state warned of food shortages because of that. is that something you could see happening? >> certainly. we have cattle sales been canceled for two weeks. that will create a little hiccup
taking cattle to the sale. we have processors don't have electricity to run. it will create a hiccup getting boxed beef out to those stores and trucks not being able to move on icy roads. reporter: in terms of the cause of this we have fossil fuel and coal blaming wind turbine folks. wind folks blaming non-renewable energy. as a farmer impacted by this what is your take on this? >> the bottom line, as farmer, rancher, i stockpiled my hay to feed these cattle. that is their energy. they need the energy to stave warm. what we need to make sure we have a consistent supply of energy for conditions like this, for things like this that happen. renewables are just fine but they have some limitations. we need to make sure we have those. we also have back up to cover that loss whenever there is i.c.e. and snow over solar
panels, they don't work. the wind is not blowing or those things get iced up. we have to be sure we have our bases covered to keep the energy coming. reporter: neil, that will certainly be a topic of conversation for texas for days, weeks, probably months ahead as they investigate the causes of these outages. neil? neil: grady, thank you very much. we'll talk a little bit about the grid, what they're trying to do about it. i want to go back to washington right now the house financial services committee, the gentleman known as roaring kitty, his name is keith gill, testifying right now. i was trying to find out how the heck this guy get the moniker roaring kitty, ranting and raising the system he says bedevils and hurts the little guy, he must have a cat or cats, because in the background is cat paraphernalia, incluesing a poster behind him. he roars, he likes cats. he is defending his views of the
little guy getting screwed here. even though he is not quite the little guy investor he purportedly said to be. he is quite accomplished, quite savvy. more with it than you think. not just a populist rage hire. let's go to him. >> no different than people in a bar, or a golf course or at home talking or arguing about a stock. hedge funds and other wall street firms have teams of analyst working together to compile research and analyze shares of companies. individual investors do not have those resources. social media platforms like reddit, youtube and twitter are leveling the playing field. the idea that i use social media to promote gamestop stock to unwitting investors and influence the market is preposterous. my posts did not cause the movement of billions of dollars into gamestop shares. it is tragic that some people lost money and my heart goes out to them but what happened in january just demonstrates again
that invest in public securities is extremely risky. as i said earlier, i consider myself and my family fortunate with our investment. when the stock price broke $20 in december, i knew my investment was a success. i was so happy to visit my family in brockton for the holidays. the money will go such a long way for us. we had an incredibly difficult 2020. most difficult was the tragic, unexpected loss of my sister sara in june. i'm grateful to be in a position to give back to and support my family. as for what happened in january, others will have to explain it. alarming how little we know about inner-workings of the market. i'm thankful this committee is examining what happened. i only want to say i support retail investors right to invest in what they want, when they want. support the right of individuals to send a message based on how they invest. as for me, i like the stock. i'm as bullish as i ever been on the potential turn around for
gamestop. he remain invested in the company. thank you, cheers, everyone. >> thank you, mr. gill. neil: you've been listening to keith gill. i want to take you to that because you know, the guy is known as roaring kitty was roaring a lot about gamestop. he undersells himself here about the influence he has. he is all over the internet. his muses pop up on youtube, twitter, reddit. he was strongly, strongly recommending gamestop. so it was not just a little touting. it was a lot of touting. so much so that he was hit with a lawsuit recently that accused him of misrepresenting himself. that he was a lot more than a amateur investor. profiting by artificially inflating the price of a given stock. that was gamestop. he says that is not the case. i was promoting something i saw virtue, wildly you know valued stock.
some say he pumped knowing well he was pumping it. it gets murky to prove intent. it gets murky to say you shut down guys like that, promoting stocks they think should be a lot higher than those who have taken a short position against that stock say it should be a lot lower. so the kitty is roaring. i still don't know the kitty thing. it kind of creeps me out. that being the case, charlie gasparino, i'm wondering here, he is positioning himself as someone freely offering opinions out there and not creating any hype. what do you make of that? >> listen, there is a reason why gamestop was is now a 50-dollar stock after hitting $500 a share and that difference, it is probably going to go down lower. i don't know what it is trading today. for all i know it is back up to 100 because of all the craziness. someone pull up a stock chart of gamestop. neil: we are. around 45.
>> okay. below 50. so my point is, neil, that the markets are made of diverging opinions. there is something known as stock manipulation where you lie about stuff purposely to pump up a stock and then dump shares later on. you had none other than than jordan belfort who basically turned that into, like a one of the most profitable illegal scams ever at oakmont. you had him on earlier. that is what he and his brethren used to do. you pump up the company, it is great. you sell at the height, knowing it will go down when reality sets in. but those cases are harder than you think. neil, gamestop does have earnings. it is listed on the new york stock exchange. you know, it was a penny stock but it, they do sell stuff. jordan belfort and his crew for the most part they were selling companies that you know, were like, from what i remember post
office boxes you know what i'm saying? they weren't real, barely real companies. most, vast majority of them. one that wasn't was the steve madden shoes which is still around. that is how old i am. i remember all this stuff. these cases, these cases are really difficult and i tell you, again, the best solution to this is what happened and people learning from their mistakes. ignoring what vlad tenev said about t-plus zero settlement. if you canned have short selling, people will be touting stocks. if you have t-plus zero you can't short sell. you don't have the time to borrow the shares and sell them which is what a short sale is. there will be much more stock touting, many more stuff that goes on which hurts small investors if we don't have short selling. we need more short selling. neil: indicate that, why they're going after keith gill here,
that it can go to excess on either side. that was certainly elizabeth warren's argument. >> sure. neil: looking at the genesis of all of this but i want to quote from this massachusetts lawsuit filed in federal court, charlie, against keith gill, so-called roaring kitty figure. gill's deceitful, manipulative conduct not only violate numerous regulations and rules but various securities laws by undermining the integrity of the market for gamestop shares. he caused enormous losses not only to those who bought option contracts but also to those who fell for gill's act and bought gamestop during the market frenzy at greatly inflated prices. what the suit is he created the crisis. he gunned it. he brought it to the next level. what do you think? >> clearly he played a role in it, but you have to proven tent. where is the email, maybe they have it, i don't know -- neil: just as you would have to prove intent to be clear, i hear
what you're saying, buddy i want to you explain that, you have to prove intent on the short side. all of the short. >> absolutely. neil: that is very, have he hard to prove but go ahead. >> i mean, what, i mean you're going to have to prove keith gill doesn't like the company. i mean that he really purposely hates the company, that on, that is what he is, only doing this to make a quick buck. i remember covering the analyst scandals way back in the turn of the dot-com era. eliot spitzer led that charge. one of the most powerful pieces of evidence he had against merrill lynch and its analysts at the time, now a journalist, henry blodget, guy named jack grubman at smith barney and others, privately there were emails saying this company is a dog but they would have a buy on the stock. you know, that is the basis of fraud. you're going to have to get that here to really press a case against keith gill.
you know may really believe in gamestop. by the way, there was talk about gamestop maybe doing something different. there was a new investor got involved in it. there is a rational. i don't apply it. there is rationale they could be doing great things in the future. i don't buy it but you got to really prove he didn't believe this the only with to prove that, you can't get inside of his brain cells. you have to get inside of his emails. but you would think they get emails first before saying he manipulated the stock. neil: they might, that is a good point, charlie. they might have them. i will interrupt them now because maxine waters is challenging some of the comments he made. i should point out when all this started, gamestop was trading at 20 bucks a share. it is now at 47 thereabouts, about 45 right now. but to charlie's point was over $500. what maxine waters wants to know how the hell it happened.
>> -- other market makers, seeking the best term for its customer orders, rather than providing such inferior trade prices cost your customers over 34 million. is your testimony that robinhood paid, is it your testimony after robinhood paved the sec 65000000 to settle those charges, that this conflict of interest is in your customer's best interests, yes or no? >> chairwoman waters, first let me say regulatory compliance is the at center of everything that we do. we made mistakes in the past. i'm not claiming that -- >> answer is no to that question? >> so citadel securities is an important counterparty. nobody is denying that. the reason that -- >> just answer yes or no, i'm reclaiming my time. mr. griffin, citadel's role in this event, raises significant
questions for policymakers. citadel securities pays robinhood tens of millions of dollars to process trade by robinhood's customers. this relationship gives citadel enterprise non-public information at the direction, volume of trades by retail investors. your firm makes you -- exchanges called dark pools and other off ex change trading to trade large sums without moving the market against you. in fact at some point last month, 50% of all trades occurred in dark pools or otc off exchange trades. your business strategy is designed intentionally to undermine market transparency and skim profits from other companies and other investors. one problem, mr. griffin, we don't know how central your forum has become to the capital markets. mr. griffin does citadel handle 47% of the u.s. listed retail
volume? please, yes or no? >> excuse me. chairman waters. what percentage, i couldn't hear that number? >> 47%. >> so chairman waters -- >> yes or no. >> excuse, best of my knowledge we handle in excess of roughly 40% of all retail volume. >> i'm reclaiming my time. mr. griff fin on january 27. citadel execute 7.4 billion shares for retail investors which would be more trades than the average daily volume of the entire united states equities markets in 2019, yes or no? >> chairman waters, that was, my written and oral testimony. neil: all right. i told you that this would focus on citadel, increasingly sure enough it is. citadel is the big hedge fund, right? it attracts other hedge funds. it has proprietary interests,
separate entities that examine shorting stocks and going long on stocks but he is the big fish here. he is the multibillionaire here. you know, people always had a long, sort of acrimonious love/hate relationship with hedge fund managers in general, that they love to hate them but in this case they get a lot of money and in this case they can control a lot of the market. in this case more than 40% of retail trading and i think they were specifically mentioning some of these issues in play. i want to go to danielle dimartino booth on this. dan geltrude. gaspo still with me, guys. dan, i have can see this playing out, a little early, we have a long way to go here, this is the big kahuna here. he will be focus after lost wrath, if not for you, if not for citadel having both ways actually incorrect, we would not have had so many of these
individual investors burned out of money and in the case of one sad gentleman last year, commit suicide. so where is this going? >> neil, this is about creating a narrative about the big bad rich guys, right? now what maxine waters will ultimately try to do, whether the facts are there or not, to create an environment to say, these fat cats such as your ken griffin, they are the problem. you see what they're doing? they control the market. they control all these trade. we must do something to stop them. and the way that happens is ultimately go to some type of regulation. i think that maxine waters endgame here is to create enough of emotion let's say around this, that gets congress moving
in a direction to say we must do something to protect the little guy. i still don't think that that's what happened but i think they go in that direction to try to put something in place, neil. >> what could they do? neil: go ahead. >> there is, mack even maxine waters is being driven if you will a study commissioned by and it bound, and i'm quoting here, in total robin hood got $18,955 from the trading firms for every dollar in the average customer account while schwab made $195. they're trying to get at the root of why robinhood makes so much more money than the average discount broker that also has zero commissions. they're trying to figure out -- if they would articulate the questions properly, they would
be asking why robinhood traders on average trade nine times more than what's traded at, sorry, 40 times more than what's traded at charles schwab. so that's what they're trying to get at, is why robinhood traders produced so much more order flow than other discount brokers such as e-trade, such as charles. schwab. >> but isn't it obvious why? social security so obvious. >> it's set up as a vegas sports book. >> what i'm saying -- [inaudible conversations] >> listen, if you want to trade, if you want to trade and trade a lot and you're the average guy who's home -- or gal -- during the pandemic and you want to do that, robinhood is the place to do it. schwab isn't. merrill lynch isn't. that's not their customer base. so this customer base was created not just because of low
interest rates, but because of the sort of situation we're in now where people are home, and they're not working so they become traders. that's what happened. now, will that exist in the future? i mean, who knows. when people start going back to work and we come out of this pandemic, i don't know. we're going of to have 0% interest rates for a long time, so people are still going to trade. and then, you know, what do you do to stop that? i don't know that there's anything you can do to stop that. the you're right and what i said before, this hearing, in order to get the necessary class warfare b.s. outrage, you have to focus on -- [laughter] ken griffin and his, you know, allegedlyville empire of -- evil empire of investing and trading and whatever else he because does. because the rest of it, it's impossible to figure out what to do with it. if you really want to be inte lek chi honest, you have to
press vlad tenev. if we have t plus 0, you don't have to hold too much capital. that may be true, but it's also true if you have people at 0, you won't have short selling. neil: all right. it does have, dan, a little, you know, dr. evil tone to it, doesn't it? like this is going to cast billions of dollars. cost billions of dollars. [laughter] let me step back from this and just get your sense, dan, about what happened. when everyone was rushing in and bid up a $20 stock to a $30, then 40, 100, 200, almost 500, it was great for the early investors who said, all right, at 400 i'm out. at 350 i'm thinking of sorting of closing out my position. early efforts could, in fact, do that. but when the rush really was on,
the door was only so wide. and they can't make the door wilder. and all these mechanics behind them explain that there were a lot of people trying to exit and score some quick hits, let alone even those who were trying to bid it up further, that they got frozen in place. is there any regulation that you know of that would stop people from being greedy? >> no, i don't. neil: okay. >> that doesn't mean the that congress isn't going to try to come up with something here, neil. i think the reason this happened was to the point that there were so many people all because of the pandemic and, yes, zero interest rates, now they're going to get into the market. and the amount of people who have participated in retail trades from december of '19 to december of '20 have almost doubled. and that shows you that people have time on their hands. they're going to go into the market. now, you have all this momentum going in a direction,
everybody's seeing it, look at game storng everybody's covering it. they don't want to miss out. some people got in later, and they got stuck, and they're going to lose a lot of money. it was purely emotional of just following the herd, but they were simile too late. simply too late. and they're going to make their lesson, as charlie made reference to. neil: so, danielle, if this goes on and takes the tone and tenor that it has, at least my musings about the direction i think this is going, fat cat hedge fund managers are bad, people who might be gutting individual investors inappropriately in politicians' eyes are almost as bad, the individual investor who weighed the risks therein are not bad. is that about right? >> yeah. i mean, i think that that is definitely the direction9 that the politicians are taking. but look, neil, on my twitter feed i was -- i said in a --
sent out a survey that said what did you do with the $600 stimulus check. i can't tell you how many people treat tweeted back, i put it straight into my robinhood account. neil: is that right? >> there's somebody to be said for the consequences of taking risk -- neil: what are they, watching cnbc? what the heck were they thinking? >> well, look, but again, these chat rooms are, they're catnip for people who have too much time -- to charlie's point, they've got -- neil: oh, i see what you did there. growing kitty, catnip thing -- >> oh, my god. [laughter] neil: you are going the extra the mile here -- >> i'm a dog person, neil. i don't like -- neil: understood. but, charlie, i'm just wondering here if individual investors did get burnt, at least the ones who got stuck and couldn't get out, some of them did okay. some of them were buying this when the stock was in the 20 thes and even now -- 20s, if
you're getting out now, you're still doing okay. but, obviously, there's something magical, right, about seeing a stock that's -- it's like tesla on acid, right? so you want to chase that as far as you can go. and i'm just wondering, as crazy as this got, babe the cure potentially could be worse than the solution because people are free to chase stocks that, on the surface, don't seem to have a rationale for going much higher. they were saying that about amazon when it had no profits. not a lot of revenues, but profits. it ended up doing okay. it ended up being a wise investment. you could say that about tesla, it might be interrupted by some real ceil economic realities, but we don't know. but what we do know in some of these cases is they all came crashing down to earth. every single one of them that
were part of that gamestop drive have come crashing down to earth. should investors be shielded from themselves and their worst instincts, and where does that go if they are? >> investors shouldn't, and these aren't investors, these are traders. let's be real clear here. that's participant of the problem. i don't think it's a problem that needs to be addressed with regulation. remember, if you were back in the day with amazon -- and i covered that whole dot.com bubble and bust and whole thing. that shows you how olding i am. you knew that amazon was a different company because it had a decent cash flow, and it was reinvesting the cash flow into the business operations where it became much more than a bookseller, but a seller of everything. and, you know -- neil: and you're right, that's why investors kept with it. by the way, wall street analysts who thought that it was overdone, but that's a very good pointment. >> some did. some did. i mentioned henry blodgett
before, a big proponent of amazon back in the day. so that's one he got right. the bigger question here though is the notion of trading, and, you know, should we prevent traders from getting, you know, harming themselves. i just don't think so. i just don't think, you know, we have so many problems in the world right now, to prevent someone from losing money on a stock is absurd. you know, if traders want to believe the guy, the message board dude, you know, good luck. trade thers want to ignore -- traders want to ignore the short sellers who, by the way, were essentially right on gamestop, they just overplayed their hand. they shorted it so much, they shorted it more than the float, as a matter of fact. which is legal, by the way. you can create a synthetic short. that'll take a long time, and people will fall to sleep on that explanation, so i won't go there. but, you know -- neil: oh, don't worry, they're
used to doing that on my show. [laughter] but you're saying that -- that's my wife watching right now. but i'm just saying, charlie, are you saying what will become of this? chad pergram's on capitol hill monitoring this. something's got to come of this. they can't just be threatening without doing something. i've come to that conclusion, i just don't know what it is. >> listen, i reported this yesterday on liz claman's show, robinhood and all the players that are involved in this believe there's going to be something done on short selling to make probably more disclose yours. you know -- disclosures. you know, it's fascinating that one of the leading short sellers is a very smart investor, the guy who uncovered enron. he's very close with joe biden, so i can't imagine that he's not calling up the white house and saying, listen, you really want to end short selling? we're not going to find any scams anymore, right? so i don't think they go as far
because of that chanos exposure. beating up on ken griffin before this is over. neil: i read the entire statement of ken griffin. we came in a little bit late to it, but, you know, far from slowing things down, griffin's strategy at citadel seems that we should speed things up. he's saying we must modernize this settlement process including short settlement cycles and transparent capital models. now, that's a lot of gobbledygook, i grant you. but what he's saying is don't slow it down, speed it up. i understand where he's coming from where you wouldn't get locked in the system doing that. but i do wonder how that's going to be received when various, you know, politicians start weighing in on that. >> well, look, neil, this is a
classic talking your book. all four of us have been saying for the past hour if you take out the check and balance of short sellers by making settlement realtime, then you are going to be eliminating, if you will, a way to uncover fraud. and if that basic, general message is not driven home, then we are crossing into very different -- look, we've got artificial intelligence, we have all kinds of technology. there's no reason that trades cannot be settled in realtime. it's not the ability or the capacity of the markets to accomplish this, it's the fact that you're going to be eliminating a backstop in the market to make sure that companies that are engaged in fraud or even companies -- you know, look, last time i had a blackberry, neil, i was at the federal reserve. the blackberry is dead. they have a lot of technology, they have a lot of patents, but that was another stock that was caught up in this mania, and you just, you cannot put a
substantial the case together that says that they have a relevant business model and, therefore, you should be able to short these stocks. and to charlie's point, i hope that jim they nose, who i know well, i hope jim chanos drives that point home. we are a country of checks and balances, we need to maintain that as well in the financial markets. neil: dan, real quickly on that, we're getting a trend here, the robinhood market's ceo also pushing just speed things up, make them the more efficient, put more into it. says that the existing two-day period to settle trade exposes investors and industries to unnecessary risk and is wife for change. he -- rife for change. he, too, seems to be saying if we had more efficient, speedier
markets and removed a lot of these barriers that sort of freeze things in time, we wouldn't have freezeses at all. i think i'm interpreting it correctly, but what dueck? >> well -- what do you think? >> well, i think even if that could appear to be self-serving on the surface, neil, because the more trading that goes on, the better off robinhood is going to be. but if you pull back from that, you can't stop technology from advancing us. and a lot of technology is based upon speedment so, ultimately, you could resist this as much as you want, but ultimately realtime trading is going to be where we're going to land at some point. there's no way around it. >> we're in realtime -- >> -- that'll play itself out. >> but we are in realtime trading. what we're talking about is settlement. and let's be real clear here, i can't believe ken griffin is for t plus 0. that would essentially put his hedge fund out of business
because they both short and long the market. if you get rid of -- this is why vlad's statements are very self-serving. if you get rid of t plus 2, if you make the settlement immediately, that could end short selling. just the way the process works. if you end short seal selling, neil, that will help robinhood's business mold, but it's going to be bad for the small investor because there's not -- neil: wouldn't it be bad on the long side as well, charlie? in other words, if you had to wait for a trade to clear, if you -- for very good reason, to make sure a buyer and seller finish things -- >> right. neil: but if you withdrew that, it could cut both ways, right? >> yeah. but remember, you get the price you pay for it. it doesn't have to clear first and then the price is established, you know? you get the price you pay for it. instantaneous pricing, there's matching buyers and sellers, there's a two-day process to
clear the trade which allows a bunch of checks and balances. by the way, if you go to the bitcoin model, that whole arrangement, what's the name of it, bitcoin trades through -- that's an instantaneous settlement. neil: right. >> but this prevents -- neil: and, by the way, i really believe, charlie, this backdrop is helping bitcoin. >> it is. neil: pedigree players coming to the market to justify investments in cryptocurrency, but you can't tell me this nonsense is going on and how fast it is to do exchanges and to buy something with a cryptocurrency without any of this -- i'm just saying you can well understand why it has gotten to be such an attractive investment of late. >> right. and remember, bitcoin is all about the block chain technology where there's no -- you don't need the settlement process, right? you can buy stuff immediately.
you can buy a house immediately theoretically because everybody's checked off in the block chain. but investing's different. you can't buy it, sell it, buy it back, and that takes a little time. that's why there's two-day settlements. you can't do that, you're just removing a seriously necessary voice in the market which is the short side. again, we need more shorts, not less -- neil: but, charlie are, you and i are both old enough, and i'm a little older than you, so i was actually covering this during the civil war. [laughter] so if we're old enough to know that every time the you know what hits the fan, they ban short selling finish. >> well, they try. neil: and now they're armed for bear here. i mean that divide literally and figuratively are here. and i wonder with the best of intentions, they're going to target those guys, not the guys
who were frenetically caught up in a rush to reverse their positions. that's what worries me. >> it's possible. and, you know, likely targeting. i think in the end they don't do anything, and the for the i mentioned before, jim chanos and joe biden have very close friends. i mean, socializing friends. they talk to each other all the time jim raised money for him. he's on the phone with joe biden right now explaining why short selling is good for the markets, and there's going to be others that do that. you know, maybe elizabeth warn's going to want to do it -- elizabeth warren's going to want to do it, but it's got to be signed by the president. i can't imagine gary gensler, he's worked on wall street for a long time. i've been critical of many shorts, tesla, the way bill ackman went after herbalife, but
i cover the markets. it is the wild west. and here's one other thing that's very interesting. why was amc, why was gamestop as pen gnu stocks still risked on the new york stock exchange? if you were worried about speculation in penny stocks, which they're problematic companies, how does a penny stock which is defined by the ces as a stock trading at $5 or below, listed on a major exchange? the sec identifies a penny stock is $5 and below, yet on the new york stock exchange and i believe on the nasdaq you can trade dollar stocks. if they're not listed, by the way, they don't trade on robinhood. and that's a question someone should be asking. neil: very good. you know, charlie, you don't have to worry about these comments triggering an avalanche of massive e-mails -- >> just looking at my twitter page right now. neil: there we go.
charlie -- [inaudible conversations] [laughter] neil: that rings a bell. thank you, my friend. he'll be back with us a little later. chad pergram is following these developments on capitol hill right now. some on wall street are saying, chad, that this committee is teeing up regulation or some sort of new oversight of some sort. what do you think? >> that's right. there's a lot of frenzy over this, and it's unclear what, if anything, congress could actually do. this is the first congressional hearing in the house of representatives. we expect one in the senate at some point. lawmakers probing why gamestop's stock soared and spurred all these spasms in the market and got individual investors to jump in. listen. >> oh, yeah. i saw it as a form of being a part of a larger message in sort of online protest, if you will, to kind of bring light to the issues at hand. we should take a look at it.
>> reporter: here's an explainer. back in january investor keith gill known on reddit as roaring kitty posted that gamestop was undervalued. hedge funds had bet that gamestop's price would go down, but interest on reddit, i should say, went viral and explode the price to $483 a share. the stock is now back down in the $40 range, and because of the rate of the decline, some people lost money. david v. goliath. many trades were made on robinhood. >> despite the unprecedented market conditions in january, at the end of the day what happened is unacceptable to us. for our customers, i'm sorry, and i apologize. >> reporter: now, robinhood stopped buying stock, too much risk. as i say, t unclear what
congress can do, and it's certainly unclear what the sec can do. neil? neil: so bottom line, chad, we have a bad, you know, austin powers playing out here, right? we have, you know, the evil hedge fund managers, we have a roaring kitty -- i'm thinking of dr. evil with the kitty thing -- and now we have nefarious elements that are trying to destroy the financial system as we know it to the tune of billions of dollars. i mean, you can't make this up. >> reporter: well, that's what people were asking during the hearing and leading up to the hearing, where does investment advice stop, and where does the first amendment begin or vice versa. this is where you have some members, carolyn maloney, democrat from new york, talking about the infusion of cash into the market might have actually helped things. that's important, to prop that up. again, this is a very sticky wicket, and lawmakers are going
to come down on other sides. patrick mchenry on the financial services committee, he said what is the remedy at all here? you know, is this something that congress just wants to jump this on? you have elizabeth warren, the democrat from massachusetts, who said there should be more regulation of the markets. certainly democrats pushing for bigger government programs are going to use this as a wedge to advocate for that. certainly someone like elizabeth warren with her background. but, again, it comes down to what can they actually do, because you have so many different, competing interests in the story. neil: all right. chad, the fact that you didn't comment on -- is very good, dr. evil impression, disappoints me. [laughter] >> reporter: -- hearing that he was not a cat. he said that. neil: yes, he did. thank you, my friend. he's the best. all right, i want to go to anne berry, scott martin, kings view
asset if management cio. anne, where is this going? where do you think right now this is presently going? >> i think there's going to be an increasingly visible presence in d.c. looking at some of these newest technologies. but i think, neil, the issue here is a question of really not being able to -- and when there are changes in regulation, ended short selling, there are huge unintended consequences to that. and i think what it really points to is a need for the regulation body to informs more in -- invest more in technology, to be more forward looking than reactive and really starting to think about getting ahead of these trends rather than go after them after the -- neil: jackie deangelis, i apologize, you're joining us here. you talk to the traders a lot of the time, they think the system
isn't broken, it's working the way it should. some people rushing into something are going to get burnt and that the door's only so wide on the way out. happened in other prior market disruptions, and i'm using a kind word there. especially in the middle of the financial meltdown in 2008 and '9. i'm just wondering what they're telling you now. >> well, that is what a sophisticated trader would say about what happened here, and they would say buyer beware, if you're a little guy and you're putting your toe in this big pool of water and you don't know what you're doing, you can get burned. but a lot of people who didn't necessarily have the timing right on the gamestop stock, for example, got burned as well too. and what it's coming down to is sort of these traders aren't really sticking their nose in the fray at this moment. but what i look at is why did this happen in the first place, right? why were people taking stimulus checks and going on robinhood and investing in these stocks that maybe or maybe not don't have the fundamentals to move
higher the way they did in such a fast clip? it's really because of the market environment that's being created, and we have to step back and we have to look at that, right? we're in the middle of a pandemic, we've got these low interest rates, a lot of people are out of work, a lot of people are suffering, and the stimulus money is now being invested in the stock market, and people are using this as way of generating income. that's not what the stock market is supposed to be. you're supposed to invest it for the future, on fundamentals. you're not really supposed to get ahead of your skis here, and that's one of the big issues, i think. neil: you know, scott, you and i have discussed this, not too long ago someone said, neil, the one thing that could stop this craziness is suitabling competition for stocks. right now even with the night back up in rates, we've seen there's none out therement so so this type of behavior will probablien continue when you're looking at near 0% interest rates, cds that return a
fraction of a percent on your money, or you're going to see more of this. and real estate might be an alternative for some, not all. and that, you know, markets that have run up and rich, they look for alternative investments or hidden buys within those markets to keep the good times going. so isn't that the backdrop that actually advances her of this behavior no matter -- more of this behavior no matter what congress tries to do? >> agree. and to jackie's point, neil, the way the setup is that forced these investors, let's call them that graciously, to take those checks and put the money in the stock market instead of putting it for maybe food on the table. maybe they didn't need the money, so they're using it for other things as well. those alternatives just don't exist right now. i would argue there's an alternative that's out there which is bitcoin, as that has proliferated into different segments of the population, more
people have access to that risk profile as far as bitcoin goes. i'll tell you one quick thing though to stay with the animal theme that you asked ann earlier, where's this going? it's going down a rabbit hole, if i may say. this type of thing that just happened is not going to occur again. the horse has already left the barn as have all the other cattle, and i'll stop with the animal references there. the reality is this is a once in kind of a lifetime occurrence as to how the sec, robin hood, regulators came to exist as they did. going forward, as i think ann pointed out correctly -- and this is scary to think that congress and the regulators have to take on this responsibility -- they're going to have to get ahead of what this next crisis can be. the flash crash, which was just a couple of years after the financial crisis, occurred to where there's been all kinds of market liquidity drying up that
has caused things like this to happen just like what happened with gamestop and some of these other things just a month ago. neil: ann, it's very clear at least for now the politicians are, you know, the citadel and melvin capital ceos, they're the rich guys, the ones with the billions and the hedge fund investors that pay handsomely for their services, and they are the ones that will be the target. do you think this could get to the next stage where we really go after hedge funds, really limit what they can do, regulate the hell out of them beyond efforts that have been made in the past, particularly after the meltdown? >> the facts coming out of this is going to be able to precipitate that, neil. i think the hearing continues and the hedge funds make their case that there were no rules that were being broken, some hedge funds lost a lot of money in all of this, some made some more. so i don't know that it does become the catalyst for going after the hedge funds more
aggressively. but i do want to come back to something that scott said. i'm not sure this doesn't happen again. and jackie said something really important which is why are people going out and spending their stimulus checks and doing trading instead of putting food on the table. and i hope this prompts better education that starts in high schools that teaches young people before they can go on these apps how to manage personal budgets, and it's become a much broader discussion around how to make sure that the average retail investor is well quippedded to distinguish fact from fiction when making some of these decisions. neil: jackie, and i'm not blaming your generation or young people in general, but a lot of them have been intrigued to come back into the market. but wanting to get or land on the next tesla, land on the next amazon, land on, you know, even a microsoft that all of a sudden
starts making money hand over fist and the stock rises. but they're always late on those big guys, so they look and scour for, in this case, all the stocks that have been shorted and build a little drama, a little excitement over, you know, even if they come up a little bit on a percentage basis , 8, 9, 10% returns with a mutual fund because, well, we should be able to do better than that. i'm talking about these new investors, jackie, i want the tesla return, i want the apple return. i want that. and the only way to do it is to get deeper into these risky areas. if they can make it day trading on it, they'll do that. is there any way you can police that sort of thing in a market that offers few other alternatives because the cd seems boring, the treasury note seems boring, you know, a lot of
people have been turned on to some commodities lately, but that by percentage terms is boring, and they tonight want boring. >> i don't think they can police it, neil. i think what you have to do is step back. if you're somebody who's going to regulate the hedge funds or try to change the system in this way with, we have to keep -- you know, i say that again, why did this happen? that' what we've got -- that's what we've got to explore here. part of it is about the education and the stock market and investing, but also part of it has to be if i have a traditional, you know, high-yield savings account, and literally i'm telling you a true story, they sent me a notice my interest rate was 1%. every month they kept saying me an e-mail saying t going gown, it's going down. so what you have here is a class of investors who want to get rich quickly, and they've seen people do it in the stock market with amazon, with microsoft, with apple, and they're trying to play games here.
and, unfortunately, you know, that really wasn't -- i know a lot of people make a lot of money that way, but that really wasn't what the markets were intended for. if there were other alternative investments that were higher, cds yields more, the bond market was more attractive, people would have more of a diverse asset class to get into, and they wouldn't be risk so much. you turn wall street into a casino and you see your friends around you investing in some of these companies and literally turning into millionaires, you sit down coming to work every day, and you're saying to yourself, what am i doing wrong here? my god. neil: i just found out, jackie, the other anchors here are paid. [laughter] so you might be right. all right. we're going to take a quick break here, guys. just updating you on this house financial services committee hearing, looking into all the stuff that happened around gamestop and all these other
shorted stocks and the fear that it created. one trend that is evolving in the hearings as we're monitoring them is they want to make the process safe for people who get burnt. but in doing that, can you really insure people against themselves? should you? after this. ♪ at t-mobile, we have a plan built just for customers 55 and up. saving 50% vs. other carriers with 2 unlimited lines for less than $30 each. call 1-800-t-mobile or go to t-mobile.com/55.
neil: all right. they're even calling today's house financial services committee hearing gamestopped, that they're just trying to stop some of the frothiness that they say burnt a lot of individual investors, many of whom lost everything. it happened in market runups before where everyone's trying to get out the door at the same time. the early ones did, but they weren't making the door any
wider, and therein lies the rub. could will there have been a better process in place to make sure that, you know, everyone could find an orderly way out if they wanted to sell their shares of gamestop or some of these other ancillary issues that got caught up in the fray, or was all this of this destined to happen anyway? hillary vaughn's been following this hearing on capitol hill. hillary. >> reporter: it's been pretty fiery, and a lot of the questions have been pointed out at robinhood ceo vlad tenev asking if they could have handled the situation better. he admitted robinhood did make some mistakes in how they handled this situation but notes that it was unprecedented, and they could have not predicted or prepared for a situation like this but assured the committee that now they are prepared. one of the issues that they had and the reason why they decided to pause buying of gamestop's stock was because they didn't have the capital that they needed to, essentially, assure those trades over the
two-daytime frame that is required. and so they raised a bunch of money, $3.4 billion, which he says gives them a cushion now to deal with volatility that may come up like this. but he also said that they could have handled the situation a lot better. he one question though from chairworm waters to the -- chairwoman waters to the ceo today was how did they not have a liquidity issue if he admits they didn't have enough money and that's essentially why they had to pause gamestop stocks from being bought by their users. >> -- concerns about having enough capital to meet the asset requirement, isn't that ally quid fit problem? could you just answer yes or no? >> chairwoman waters, i appreciate the opportunity to address that -- >> yes or no. >> we always felt comfortable with our liquidity and the additional capital -- >> please answer yes with or no. >> we always --
>> [inaudible] i don't have time. i just need a yes or no answer. >> i stand by my statement. the additional capital we raised wasn't to meet capital requirements. >> reporter: and, neil, there also was a exchange between congressman brad sherman and the citadel ceo. he was trying to get an answer on whether or not they treat orders from a company like robinhood differently than they may treat an order from a company like fidelity, really trying to pin him down on a yes or no in response to that question. he didn't get it, and he told the citadel ceo, you're wasting my time, and if you wanted to filibuster, you should have run for the senate. so there's been a lot of back and forth. but, neil, one answer -- or one question that did get answered was from that user, roaring kitty, who did make millions of dollars off of gamestop, he told the committee today that he is not a cat, but he also stands by
his bullish position on gamestop even today. neil? neil: all right. so yes or no, are you going out of your mind following this? [laughter] >> no, i'm not. it's entertaining. it's better when you have a lot of fireworks and a lot of back and forth than nothing exciting. neil: all right. you answer a question, unlike any of those witnesses. hillary, great coverage. look forward to more of it. let's go to ann berry, i believe she's still with us, and scott martin. is jackie with us? i just see ann and scott. so, ann, let me get your take on that -- oh, jackie is there. basically, this is going to go on a long time and basically i can kind of see that, you know, the political response, we better not leave this with no response. they're under increasing pressure by their own words and their threats to do something. what i'm not clear on -- i know
you're leery of maybe the government getting overinvolved here, but something is going to be done. i guess what i'm asking you then is what would do the least harm in the market's eyes? because the market, i guess, is always worried if you police them the, how soon is it before you police us. if you restrict their trading, how soon is it before you go after our trading? if you charge them for what they did, how soon is it before you charge us for trades and all this other stuff that's out there, you know, all across? i'm just wondering what would be the least foul alternative the as far as government interaction here. >> you know, neil one, one of the messages could start to be applied for some of these alternative asset platforms. one of the things that the ceo of robinhood is saying in different ways when he was asked the question, we weren't ready. we couldn't have anticipated for this to happen, so we didn't
have the liquidity available to handle the unthinkable. and so, neil, when i think about what could be a part of less harm as they wind their way through this, is there a way to -- the robinhoods of the world to do more stress testing, what would happen to that risk model and make sure they have a plan in place to handle it. to that's one idea i would throw out there that helps to get education going to the regulatory institutions but also forces some of these businesses to make sure they're prepared in ways they haven't been so far. neil: all right. ann, that makes way too much sense, so that's not going to happen. we're done with you. [laughter] scott, i'd be curious, what do you tell investors, because i'm always intrigued by how you guide investors -- you can understand their frustration about this is the only game in
town. i see so many people around me and hear about these guys becoming instant millionaires or would have, should have, could have on bitcoin when it was trading at $1,000, now it's north of $51,000. they want in on that party. but as you know, that's not a wide spread or heavily attended party. there are very few people who manage to pull that kind of thing off. so what do you tell them, especially younger investors who hear that you're offering them, you know, a market superior return but their saying 8, 9, 10%, no thank you. i want the 50, 100, 300% return. what do you say? >> yeah. they want the stuff that everybody's talking about. i don't think a lot of people, to your point, neil, are actually getting it. it makes for good headlines, it's good sensationalism, but it's the really not there. as investment advisers, i have compliants of my own, neil, we try to steer clear with of this stuff. unlike roaring kitty, i don't
know him personally, but for him to say gamestop was an attractive stock at 5, 10, 50, 100 because of the fundamentals, seems nuts to me. the stuff we invest in, the amazons, the googles, the adobes, paypals, visas, companies we really like and understand and fundamentally are some security in them, those are where we direct our investors. unlike some of the comments in the previous segment about how this is a wad mark on the over-- a bad mark on the overall market, i really don't think it is. i think to put gamestop and bed bath and beyond and amc and a fossil into the same category as, oh, this could happen to microsoft, amazon and googling, i just don't see it. those companies are way too big and way too actively traded to have this kind of manipulation that came through on gamestop. it was trading at $5 and was well under a billion dollars in size. as charlie said earlier, basically, a penny stock.
>> yeah. >> we try to steer clear of these speculative names and get people into real fundamentals in the market which you can find. and you can find return and safety and more predictability in the names that i mentioned. neil: that's interesting. i just should have listened to my teenage son. while i thought gamestop was going out of style because we always -- download games and all that, he said, by the way, just give us $30 for this. so maybe i missed something there, but i'm clearly showing my ignorance. but, you know, scott raises a very good point, jackie, when you think about it. he drew distinctions, and his firm does research to take a look at there is a difference between an amazon or, you know, some of these other companies that come along or a tesla that are building something that a smart analyst could start crunching the numbers and saying, all right, this is not a pets.com, this is not some pie in the sky potential versus
earnings that might never come. there is a craft to that, and it's called homework. >> yeah. neil: it's doing your research. sometimes the research doesn't pan out right away. early investors in amazon were frustrated they weren't seeing any gains for a long time before they were. but there's no shortcut to homework. i don't know if that, you know, is any sage advice on my part, but i would say, you know, hard work is one thing, but also doing your research matters. no matter what it is, in terms of buying, you know, a furnace for your home or checking out contractors and who's good at what and, yeah, buying stocks that might be risky. what do you think? >> it's a lesson for all of us, neil. and it applies broader than just the stock market as well, as you say. when you work hard for a buck and you're going to spend it on something whether it's an equity purchase or typical asset, whatever the case may be, you do need to do your research to make
sure you don't get burned. and you mentioned the tech companies that everyone loves like microsoft, amazon and apple. these are companies that if you sat back and looked at them and you can pull their financials up on the internet, you can see they have cash flow, they have earnings, they have a business model, every innovative leaders, they're trying to change their business model with a plan, with a structure. an assignment where i was standing in the front of gamestop telling you about the fact that there was nobody in the store, nobody was buying anything, and this wasn't a sustainable business model anymore. so there are some people out there like roaring kitty, for example, who will say, well, they finally got with the program, and they're not just selling these game cartridges. they're going to start competing with fortnite and all of these online gaming apps. but they're really, really late to the party. so what it comes down to about investing is sit back, look at the thesis, try to understand what the business model is, what they're doing, are they an early mover, late mover, really basic
stuff. but to your earlier point, people look at the stock market and they see other people making these kinds of gains in hedge funds and smaller investors, and they want a piece of it. and they sort of feel like they've been left out of it. so something like this happens with gamestop, and remember the role that technology played here. i will disagree with roaring kitty and say this is not like the conversation that you have on the golf course or at the water cooler. technology democratized that conversation the same way it did in the arab spring which i covered, for example, where people were able to organize themselves, and they were able to get together in a way that they never had before. that technology is out there. so this is not going to stop as we move forward. neil: yeah. you know what gives me pause though, ann, reputable stock people who follow the market for a living, they generally don't have nicknames, right? i know warren buffett is the sage, i get that -- [laughter]
but scott martin is not madman martin -- >> maybe not now. neil: you are now. if i know i'm going into an investment recommended by roaring kitty, someone should grab me and say, neil, no, no, no. [laughter] >> yeah. neil: what are you doing? and sometimes these are manifestations of craziness that all i tell people is maybe you should step back a little bit. there might be perfectly justifiable reasons to get into this, and you like hearing them from a guy named roaring kitty, fine. maybe that should tell you something. maybe that should indicate how frothy and almost theatrical this has become. but i'm just wondering whether that kind of behavior, that drove mentality, is part of the problem here. we're getting ahead of ourselves. what do you think? >> the fact that jackie talked
about the arab spring, it points to the idea that this crowd sourcing of ideas, social media pulling out different individuals to come up with ideas, project them and amplify them whether it's on stock trades, political positions, i think what you're really sort of leading leading into here, neil, is do we have appropriate disclaimers, do we have on these platforms enough warnings that the content that people are receiving is not from those who are professionally trained in that whole homework process which jackie laid out. and so, you know, i don't know that madman martin's necessarily going to be -- [laughter] [inaudible] i do think it's about disclaimer. and, again, i think it comes back how do we reach the younger, those who are digitally native who are growing up with
social media and mobile devices in their hands, and how do we teach them early to do their homework on where the content is coming from and to make sure they're educated before they pull the trigger on some really risky behavior. neil: i'm still working on a nickname for you, ann. scott, i've got you figured occupant. jackie, don't get me started. we'll see what happens. by the way, one viewer's letting me know, who are you to rail against nicknames, neil the heel? i see what you've done there. we'll have more after this. aah! ok. i'm on vibrate. aaah!- only pay for what you need. ♪ liberty. liberty. liberty. liberty. ♪
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>> reporter: yep. it is an extremely complicated mission, especially today's landing on the surface in about two hours. it's the first nasa mars rover in nearly a decades, and the jet propulsion laboratory in california says it's the biggest, the best and the most scientifically advanced rover ever. it launched from florida several months ago and is set to land at 3:55 eastern time this afternoon. because it takes about ten minutes to receive data from mars to earth, nasa won't know until a little bit after 4 will the landing is perfect or a crash. it's calling the final descent seven minutes of terror. perseverance will enter the atmosphere zipping at 12,000 miles an hour and then will slow down with a parachute, a landing crane with reverse thrusters and then drop down at a gentle 2 miles an hour on cables. the rover is equipped with 19
cameras and 2 microphones so that we will be able to not only see, but hear what being on mars sounds like. it will land in a crater which scientists believe is an ancient lake bed and, thus, could have evidence of previous microbial life. >> absolutely. yes, the scientists are looking for ed of ancient -- for ed of ancient life on the surface of mars. and just as importantly, it's a steppingstone towards human exploration of this planet, exploration the likes of which we have never seen in the history of exploration. >> reporter: and this rover carries a small 4-pound helicopter, kind of like a drone, which will fly four reconnaissance missions scoping out further on the fast and providing landscape about a possible landing site for a future human mission there. and this rover also comes equipped with something called moxie. not the usual cliche phrase,
it's an acronym, and it stands for an experiment that's going to test whether oxygen can be made from all of mars' carbon dioxide which is what its atmosphere contains which, obviously, if we're ever going to hand humans -- land humans there and live outside and a little longer than just a few weeks, they're going to need oxygen, so that's a very important one, neil. neil: it's going to be wild. phil keating, thank you very, very much. the microphone thing, that's kind of cool. get off me, get off me! [laughter] kidding. we'll have more after this. ng and unmatched overall value. together with a dedicated advisor, you'll make a plan that can adjust as your life changes, with access to tax-smart investing strategies that help you keep more of what you earn. and with brokerage accounts, you see what you'll pay before you trade.
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traded with a touch. the gold standard, so to speak ;) neil: all right. waiting for that mars rover to land later on today. we'll monitor that. charles payne monitoring everything else. hey, charles? charles: neil, like the old thing where you balance all those plates at one time. thanks a lot, my friend. good afternoon, everyone, i'm charles payne. this is "making money." breaking right now, house members grilling the ceos of robinhood, reddit, others involved in the gamestop saga last month. that stock jumped 2,000% before it was forced back to earth. the biggest investment winners in 2021, talking microcap to bitcoin, it is clear to me small investors are still winning but it is also clear that power elites and their allies in the financial media have ced