Hedge fund mainstay Ken Griffin is once again tackling the Robinhood mess of last winter. A recent lawsuit was filed accusing him of restricting trading of GameStop and other memes actions through his company Citadel Securities, a large market maker that handles online brokerage transactions at no cost, in order to to help Griffin’s own positions.
After a torrent of anti-Griffin accusations emerged on Tuesday, the hedge fund operator retaliated by denying that he or Citadel had colluded with Robinhood Markets to freeze memes trading. Griffin testified before a Congressional panel in February that he had nothing to do with Robinhood’s decision to temporarily prevent customers from buying GameStop and related stocks.
The lawsuit, filed in federal court in Miami, argues that Citadel Securities built up a substantial short position in GameStop and the like, and relied on Robinhood to ban its amateur traders from buying the shares. Senior executives at Citadel Securities and Robinhood have had “numerous communications with each other which indicate that Citadel pressured Robinhood,” the lawsuit reads.
The market-making firm, which claims to be independent of the Citadel hedge fund operation even though Griffin controls both, has denied this. Robinhood too.
The short-squeeze campaign by equity aficionados last winter to push up the prices of short-target stocks sought to stick with hedge funds that bet on the fall of those stocks. Robinhood said he stifled the flow of transactions in GameStop, AMC Entertainment and the rest because he lacked capital. Specifically, Robinhood said he needed to find the money to deposit more collateral with the Depository Trust and Clearing Corporation (DTCC), the clearinghouse that is the crucial link in stock trading.
Yesterday tweets with the hashtag #KenGriffinLied were very popular on Twitter, demanding that the hedge fund impresario be sued for lying to Congress. They also pilloried Robinhood CEO Vlad Tenev for allegedly coordinating the shutdown of trading with Citadel Securities. One said, “Ken Griffin lied about asking Robinhood to scam retail traders with billions of dollars by disabling the buy button.”
Griffin himself responded with several tweets calling the allegations false. In a statement, he said: “It must frustrate endless conspiracy theorists that Vlad and I have never texted, called or met. But I must say, well done to Vlad and his team at Robinhood for their remarkable achievement.
Tenev, in his own statement, said the trial presents “a false story of collusion.”
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Tags: amc entertainment, Citadel, Citadel Securities, GameStop, hedge fund, Ken Griffin, lawsuit, meme stocks, Robinhood, short squeeze, Twitter