For Rep. Patrick McHenry (R-N.C. 10th District), ranking member of the House Financial Services Committee and proponent of more open financial markets, the GameStop trading frenzy presents an opportunity to further democratize investing.
"This is a true power-of-the-people moment, where you see Reddit users… that communicated with each other about what large sophisticated hedge funds were doing to a particular stock, and so they took action," McHenry told Cheddar.
The committee will hold hearings on the incident in the next two to three weeks, according to McHenry. The goal, he said, is to better understand if there are any legal issues to address and if the David-and-Goliath media narratives pass the muster of closer scrutiny.
"We need to understand if any laws were broken, if any regulations were broken here, and what exactly happened with this larger moment of Reddit users outsmarting and outwitting hedge funds," he said.
The representative also stressed that the hearing would not focus on a single company, such as Robinhood, which has gotten heavy criticism from fellow lawmakers on both sides of the aisle for limiting trading activity of Reddit-targeted stocks in the middle of the buying spree.
Robinhood CEO Vladimir Tenev recently said in a conversation with Elon Musk that the restrictions were meant to help the company conform to capital requirements. McHenry said regulations concerning capital requirements for broker-dealers could also be on the docket.
"We have to make sure that the regulations are appropriate for broker-dealers to hold capital," he said. "We need to understand the clearing process."
Ultimately, he said it should be easier for newcomers, such as the wave of investors who piled into GameStop stocks, to take advantage of financial markets.
"What this moment shows me is that average, everyday investors can be quite sophisticated, and simply having a wealth standard is not a sufficient mechanism," he said. "We need to ensure that people can test into the accredited investor standard, so that these average, everyday investors can get those deeper, earlier access to sophisticated products."
On Monday, Peloton CEO John Foley stepped down, 2,800 layoffs were announced, and its stock price skyrocketed. Lydia Moynihan, business reporter for the New York Post joined Cheddar News to talk about why investors are excited about this shift in power, while thousands of its workers were let go in a less than ideal manner. "One of the headlines that emerged was that even as they were being fired, Foley sort of couched it as, 'well, you know what, you're still gonna get a year's login to a Peloton subscription', as if somehow if that would make things better," Moynihan said of the soon-to-be ex-CEO. "So, even in that, it was seen as a very sort of tone-deaf move as people were being axed."
Low-cost airlines Frontier and Spirit have agreed to merge in a deal worth $6.6 billion. The new company name and other terms of the deal have not been disclosed. If approved, the merger would be the fifth-largest airline in the United States. Jonathan Root, senior vice president at Moody's, joins Closing Bell to discuss the impact this deal could have on the broader airline industry, as well as why it makes sense for both discount airlines to combine.
Jet Tila, Food Network star and author of '101 Thai Dishes You Need to Cook Before You Die,' joins Cheddar News to talk about his new cookbook that's helping people cook authentic Thai recipes.
Crypto is increasingly becoming a hotspot for criminals and fraud with cryptocurrency crime reaching a record-breaking high. reports show scammers took $14 billion worth of crypto in 2021 alone. The latest crypto scam is aimed at investors in Binance. Ben Armstrong, the founder of Bitboy Crypto, joins Cheddar News to discuss.
In 2022, the FAA has received 323 reports of unruly passengers so far. Soon, flying could soon be limited to cooperative passengers only. Delta Airlines has asked the Department of Justice to put unruly travelers on a 'no-fly' list. Bryan Del Monte, president of the Aviation Agency, joins Cheddar News to discuss.
New York City’s tourism industry has seen a bumpy recovery from the pandemic, as the omicron surge delivers yet another blow to one of the world’s top tourist destinations. The arts and entertainment sector has been one of the hardest hit, with Broadway shows canceling performances once again after an industry-wide shutdown. Chris Heywood, executive vice president of global communications at NYC & Company, joined Cheddar's Fast Forward to talk about why he's confident the theater district - and the rest of the city - will eventually return to its pre-pandemic glory.
