Robinhood CEO Vlad Tenev Admits to Shortcomings in Communications to Customers

By: Dickson Arinze

February 14, 2021 11:45 AM

CEO Vlad Tenev has admitted that the firm got it all wrong in communicating with its customers as the company got caught up in the GameStop trading saga.

Robinhood a zero trading app that is popular among young investors, could have explained better why it restricted its users from buying 13 heavily shorted stocks including GameStop who has seen a record high as its shares surged to 1,600%.

“it's no doubt we could have communicated this a little bit better to our customers."
Tenev said late Friday on the All-In Podcast, With Chamath Palihapitiya included as host, He had strongly criticized Robinhood over the trading restrictions.

The CEO's comments came early as he is preparing to face the U.S. House Financial Services Committee on Feb. 18 about the trading chaos and Robinhood’s role in it. The CEOs of Citadel Securities, Melvin Capital, and Reddit will also be in attendance to testify.

Retail investors coordinating on Reddit's WallStreetBets to drive prices higher and force hedge funds such as Melvin to loosen up on their bearish positions made Robinhood halt trades.

The CEO said due to a large increase in deposit requirements by a post-trade regulator, the restrictions were essential. although, it was not specified in the automated email sent out on January 28, to Robinhood customers.

He added:
immediately the emails were sent out, the conspiracy theories started coming, my phone was blowing up with, ‘how could you do this', how could you be in support of the hedge funds.

Tenev admitted the email they sent out should have been carefully crafted so investors or traders don't think a hedge fund forced their hands into restricting trades.