(Bloomberg) — Robinhood Markets and Citadel, central gamers within the GameStop Corp. saga that gripped markets final month, are utilizing congressional testimony to push again in opposition to conspiracy theories circulating in Washington that they coordinated to limit retail buyers from including to their bets.Robinhood Chief Government Officer Vlad Tenev mentioned in written testimony for a Thursday Home Monetary Companies Committee listening to that the brokerage halted trades to satisfy calls for from its clearinghouse. Claims it sought to assist hedge funds are “completely false and market-distorting rhetoric,” he mentioned.Ken Griffin, Citadel’s billionaire founder, mentioned in his ready remarks that he didn’t study Robinhood had barred GameStop purchase orders till after the restrictions had been publicly introduced. “I wish to be completely clear: we had no function in Robinhood’s determination to restrict buying and selling in GameStop or another of the “meme” shares,” mentioned Griffin, whose monetary empire features a hedge fund and large market-maker Citadel Securities.The digital listening to will provide lawmakers their first probability to grill executives concerned within the current stock-market frenzy, which alarmed each Wall Road and Washington. Chairwoman Maxine Waters, a California Democrat, has mentioned she desires to scrutinize all gamers tied to the tumult to evaluate whether or not new guidelines are wanted to curtail the affect of hedge funds and to strengthen guardrails for smaller buyers. Gabe Plotkin, a hedge fund supervisor whose agency took heavy losses throughout final month’s Reddit-fueled buying and selling, plans to inform Congress that he was “humbled” by the expertise.“Melvin Capital performed completely no function” within the choices of buying and selling platforms to restrict the shopping for and promoting of GameStop shares, in keeping with Plotkin’s written testimony. “In truth, Melvin closed out all of its positions in GameStop days earlier than platforms put these limitations in place.”‘Tough Time’Plotkin used his testimony to make clear that Melvin Capital wasn’t “bailed out” by the $2.75 billion it acquired from Citadel, Point72 Asset Administration and others final month. Regardless that the agency was going by a “tough time,” it at all times had ample funding and wasn’t looking for a money injection. Citadel proactively reached out to develop into an investor, seeing it as a chance to “purchase low,” Plotkin mentioned in his remarks.Melvin Capital misplaced billions closing out its GameStop place and lowering different wagers. The agency’s belongings fell to about $8 billion in January after beginning the yr with $12.5 billion.Keith Gill, a Reddit person often known as “Roaring Kitty” who’s credited with inspiring GameStop’s rally, will testify that he was merely a person investor utilizing public info to review corporations. Gill, some of the influential members pushing GameStop on the WallStreetBets Reddit discussion board, was sued this week in Massachusetts for misrepresenting himself as an newbie investor and profiting by artificially inflating the worth of the inventory.“I didn’t solicit anybody to purchase or promote the inventory for my very own revenue,” Gill mentioned in his testimony. “I didn’t belong to any teams attempting to create actions within the inventory value. I by no means had a monetary relationship with any hedge fund. I had no details about GameStop besides what was public. I didn’t know any individuals inside the corporate, and I by no means spoke to any insider.”Learn extra: Roaring Kitty Casts Himself as Go-It-Alone Dealer, GameStop FanJennifer Schulp, director of monetary regulation research at Cato Institute and a late addition to the listening to’s lineup of audio system, will testify that rule modifications will not be warranted in mild of the minimal impression on markets. “Not at all, although, ought to the GameStop phenomenon lead to modifications that limit retail buyers’ entry to the markets,” she mentioned. In his testimony, Tenev described the morning of Jan. 28, when the brokerage halted purchases of GameStop and different “meme shares.” At 5:11 a.m., the business’s clearinghouse — a physique that manages system-wide threat — demanded a deposit of greater than $1 billion from Robinhood, he mentioned. As a result of the sum demanded was even bigger than the quantity of web capital the net brokerage had available, a further cost of $2.2 billion was slapped on prime, bringing the full quantity on account of about $3 billion. Robinhood complied with its web capital necessities always throughout this era, the corporate says.Round 7:30 a.m., in a scramble to satisfy the necessities, Robinhood determined to cease clients from shopping for GameStop and different unstable shares. The clearinghouse then agreed to waive all the $2.2 billion cost it had initially added, in keeping with Tenev’s account. With a further $737 million deposit that morning, mixed with the quantity Robinhood had already posted on the clearinghouse, the dealer met its necessities for that day.To assist forestall final month’s occasions from taking place once more, Robinhood has known as on regulators to make the settlement interval for inventory trades instantaneous. Citadel’s Griffin additionally known as for a shorter settlement time. Griffin, whose Citadel Securities pays Robinhood and different brokerages for the best to execute their clients orders, mentioned the present two-day requirement “exposes companies to extra threat within the time between execution and settlement, requiring larger capital ranges.” He additionally suggested that clearinghouse capital necessities be made extra clear.For extra articles like this, please go to us at bloomberg.comSubscribe now to remain forward with essentially the most trusted enterprise information supply.©2021 Bloomberg L.P.