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Robinhood has a stacked policy team — and it's going to need it

29 January 2021
 Dan Ackermann

The stock-trading app Robinhood has an arsenal of political power brokers it can deploy on its behalf as it faces congressional inquiries over its role in an internet-fueled market manipulation frenzy.

Why it matters: The populist, discount trading platform is going to need that firepower because its decision to suspend trading of stock in GameStop and a number of other companies on Thursday has sparked criticism and promised inquiries from both sides of the aisle.

  • Robinhood's chief legal officer Daniel Gallagher, who joined the company last year, is a former SEC commissioner.
  • In mid-2019, Robinhood hired former SEC chief of staff Lucas Moskowitz to oversee regulatory and government affairs.
  • In November, the company brought on Beth Zorc, the former senior counsel for the Senate Banking Committee.
  • Since last summer, Robinhood has hired lobbyists from four firms, including former officials at the SEC as well as the Senate Banking and House Financial Services committees.

What's happening: Robinhood blocked purchases of GameStop stock after retail traders sent its share price skyrocketing this week — dealing body blows to large Wall Street investment firms that held short positions in the video game retail chain.

  • The free trading app also suspended trades of other companies targeted by Reddit users who had banded together to try to collectively punish the prominent hedge funds.
  • At one point on Thursday, GameStop's stock was up by 2,000% since the beginning of the year.
  • Robinhood cited "recent volatility" in explaining its decision.

The move quickly drew furious reactions from lawmakers in Washington.

  • "This is unacceptable," tweeted Rep. Alexandria Ocasio-Cortez (D-N.Y.). "We now need to know more about @RobinhoodApp’s decision to block retail investors from purchasing stock while hedge funds are freely able to trade the stock as they see fit."
  • Sen. Ted Cruz (R-Texas) tweeted a thumbs up to the statement.
  • North Carolina Rep. Patrick McHenry, the top Republican on the House Financial Services Committee, said he planned to ask the panel's chair to hold a hearing. He cited the importance of "democratizing finance through technology."
  • Senate Banking Committee Chair Sherrod Brown (D-Ohio) announced hearings of his own. "It's time for the SEC and Congress to make the economy work for everyone, not just Wall Street," he said in a statement.

The bottom line: Robinhood clearly recognized it might face policy challenges as a would-be disruptor in a heavily regulated industry, as reflected by its recent hiring.

  • It's not the only politically connected company wrapped up in the GameStop saga. Citadel, a hedge fund that provided an emergency cash infusion to one of the biggest losers from GameStop's stock surge, paid more than $800,000 in speaking fees in 2019 and 2020 to Janet Yellen, the new U.S. Treasury secretary.
  • Yellen "is one of the world-renowned experts on markets, on the economy," White House press secretary Jen Psaki said Thursday. "It shouldn't be a surprise to anyone she was paid to give her perspective and advice before she came into office."

Transcripts show George Floyd told police "I can't breathe" over 20 times

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Newly released transcripts of bodycam footage from the Minneapolis Police Department show that George Floyd told officers he could not breathe more than 20 times in the moments leading up to his death.

Why it matters: Floyd's killing sparked a national wave of Black Lives Matter protests and an ongoing reckoning over systemic racism in the United States. The transcripts "offer one the most thorough and dramatic accounts" before Floyd's death, The New York Times writes.

The state of play: The transcripts were released as former officer Thomas Lane seeks to have the charges that he aided in Floyd's death thrown out in court, per the Times. He is one of four officers who have been charged.

  • The filings also include a 60-page transcript of an interview with Lane. He said he "felt maybe that something was going on" when asked if he believed that Floyd was having a medical emergency at the time.

What the transcripts say:

  • Floyd told the officers he was claustrophobic as they tried to get him into the squad car.
  • The transcripts also show Floyd saying, "Momma, I love you. Tell my kids I love them. I'm dead."
  • Former officer Derek Chauvin, who had his knee on Floyd's neck for over eight minutes, told Floyd, "Then stop talking, stop yelling, it takes a heck of a lot of oxygen to talk."

Read the transcripts via DocumentCloud.