- Robinhood co-CEO Vlad Tenev said the company “had no choice” in its controversial decision to suspend buying but still allow the selling of stocks like GameStop.
- The situation began last week when a group of Redditors largely drove an unprecedented spike in GameStop’s stock price in an attempt to cause major hedge funds like Melvin Capital to lose billions.
- Tenev said Robinhood made the decision to restrict buying because the exponential surge in stock prices resulted in a $3 billion deposit bill from the National Securities Clearing Corporation. Meanwhile, Robinhood had only $2 billion in venture capital.
- “We want to give people the access, so that’s been very, very challenging,” Tenev said Sunday night, “but we… had to conform to our regulatory capital requirements.”
- Tenev added that Robinhood still allowed shares of GameStop to be sold because “people get really pissed off if they’re holding stock and they want to sell it and they can’t, so I think that’s categorically worse.”
Robinhood CEO Explains GME Buying Ban
Since the end of last week, Robinhood co-CEO Vlad Tenev has appeared in numerous interviews in an attempt to explain and justify why his company chose to restrict users from buying new shares of stocks for GameStop, AMC, and more.
“We want to give people the access, so that’s been very, very challenging,” Tenev told Tesla CEO Elon Musk in an exchange on the audio app Clubhouse Sunday night, “but we had no choice in this case. We had to conform to our regulatory capital requirements.”
Part of the reason Robinhood’s decision has been so heavily criticized is because the company still allowed users to sell off their existing shares of those stocks. In essence, that appeared to favor large hedge funds over everyday investors.
“We got a lot of questions about, ‘Okay, you had to restrict buying; why didn’t you also restrict selling?’” Tenev told Musk. “And the fact of the matter is people get really pissed off if they’re holding stock and they want to sell it and they can’t, right? So I think that’s categorically worse.”
While other brokerages also restricted stocks amid an unprecedented surge largely driven by a group of Redditors from the subreddit WallStreetBets, Robinhood’s decision was particularly singled out because many viewed it as abandoning the company’s mission of “democratiz[ing] finance for all.”
In addition to that, many have accused Robinhood of bowing to pressure from hedge funds that it has a relationship with — including Citadel Capital, which helped pump $2.75 billion into the hedge fund Melvin Capital last week after it lost billions from its position in GameStop.
Tenev has now denied this claim multiple times, but nonetheless, criticism has continued.
“Robinhood is supposed to be steal from the rich give to the poor — that’s the story of Robinhood,” podcast host Joe Rogan said on his show over the weekend. “Instead, they are protecting all these hedge fund people and stopping people from doing this.”
For his part, Tenev said the decision was made because the surge in stocks like GameStop resulted in a massive deposit bill from the National Securities Clearing Corporation. While the process is fairly complex, brokerages like Robinhood must make initial deposits to clearinghouses when investors buy stocks.
That deposit, according to Tenev, spiked to $3 billion in the midst of GameStop’s volatility, creating a sizable problem for Robinhood since it had only raised $2 billion in venture capital.
“That essentially explains why we had to mark these symbols position-closing only, and also why we knew this was a bad outcome for customers,” Tenev said. “You know, part of what’s been really difficult is Robinhood stands for democratizing access for stocks.”
In his exchange with Musk, Tenev said Robinhood eventually managed to negotiate that requirement down to $700 million.
Robinhood Eases Trading Limits
Monday morning, Robinhood increased the number of new GameStop shares that users can buy from one to four.
Previously on Friday, Robinhood announced that it would back off from its “no-buy, only-sell” policy and would allow limited trading of GameStop; however, that meant users were restricted to only one new share each.
Robinhood also included 49 other companies on that list — including American Airlines, AMC, and even Starbucks. Sunday, Robinhood backtracked by reducing that list to eight stocks — with AMC and GameStop still among the affected.
While users were restricted from buying more than one new share of GameStop at the time, they could now buy up to 10 new shares of AMC.
See what others are saying: (CNN) (CNBC) (Business Insider)
Kim Kardashian to Pay $1.26 Million to SEC Over Unlawful Crypto Promotion
According to the agency, stars and influencers must disclose how much money they earned for crypto advertising.
Kardashian Pays Up
The U.S. Securities and Exchange Commission announced Monday that it has charged reality TV star Kim Kardashian for “unlawfully touting crypto security.”
Kardashian has agreed to pay $1.26 million in penalties, disgorgement, and interest while cooperating with the SEC’s investigation. The media mogul did not admit to or deny the SEC’s findings as part of the settlement, but she did agree to not promote crypto assets for three years.
According to a statement from the SEC, federal regulators found that Kardashian “failed to disclose that she was paid $250,000 to publish a post on her Instagram account about EMAX tokens.”
“This case is a reminder that, when celebrities or influencers endorse investment opportunities, including crypto asset securities, it doesn’t mean that those investment products are right for all investors,” SEC Chair Gary Gensler said in a statement.
The investigation stemmed from a post that Kardashian made on her Instagram story in the summer of 2021 promoting EthereumMax. In it, she asked her 330 million followers if they were interested in cryptocurrency while giving information about the coin. The post included a swipe-up link for users to get more information and potentially invest in it themselves.
While Kardashian did include a hashtag denoting the post as an ad, the SEC said that did not go far enough. In the group’s statement, Gurbir S. Grewal, the Director of the SEC’s Division of Enforcement, explained that anyone advertising crypto assets “must disclose the nature, source, and amount of compensation they received in exchange for the promotion.”
A “Reminder” For Crypto Promoters
As a result, the billionaire businesswoman is paying a $1 million penalty fee. On top of that, she has to pay $260,000 in disgorgement, accounting for the payment she received from Ethereum Max and interest.
Kardashian’s lawyer released a statement saying the star has “fully cooperated with the SEC from the very beginning.”
“She remains willing to do whatever she can to assist the SEC in this matter,” the statement continued. “She wanted to get this matter behind her to avoid a protracted dispute. The agreement she reached with the SEC allows her to do that so that she can move forward with her many different business pursuits.”
This is not the first time Kardashian’s EMAX post landed her in hot water. A U.K. watchdog previously condemned her for shilling the coin, and she was sued earlier this year over allegations that she artificially inflated the coin’s value.
Gensler said that he hopes the charges from the SEC will serve as “a reminder to celebrities and others that the law requires them to disclose to the public when and how much they are paid to promote investing in securities.”
Misinformation Makes Up 20% of Top Search Results For Current Events on TikTok, New Research Finds
According to the report, the app “is consistently feeding millions of young users health misinformation, including some claims that could be dangerous to users’ health.”
Misinformation Thrives on TikTok
As TikTok becomes Gen Z’s favorite search engine, new research by journalism and tech group NewsGuard found that the video app frequently suggests misinformation to users searching for news-related topics.
NewsGuard used TikTok’s search bar to look up trending news subjects like the 2020 election, COVID-19, the invasion of Ukraine, the upcoming midterms, abortion, school shootings, and more. It analyzed 540 videos based on the top 20 results from 27 subject searches, finding false or misleading claims in 105 of those posts.
In other words, roughly 20% of the results contained misinformation.
Some of NewsGuard’s searches contained neutral phrases and words like “2022 election” or “mRNA vaccine,” while others were loaded with more controversial language like “January 6 FBI” or “Uvalde TX conspiracy.” In many cases, those controversial phrases were suggested by TikTok’s own search bar.
The researchers noted that, for example, during a search on climate change, “climate change debunked” showed up. While looking up COVID-19 vaccines, searches for “covid vaccine injury” or “covid vaccine exposed” were recommended.
Dangerous Results Regarding Health and More
The consequences of some of the false claims made in these videos can be severe. NewsGuard wrote in its report that the search engine “is consistently feeding millions of young users health misinformation, including some claims that could be dangerous to users’ health.”
Among the hoards of hazardous health claims were videos falsely suggesting that COVID-19 vaccines are toxic and cause permanent damage to organs. The report found that there are still several videos touting the anti-parasite hydroxychloroquine as a cure-all remedy, not just for COVID, but for any illness.
Searches regarding herbal abortions were particularly troublesome. While certain phrases like “mugwort abortion” were blocked, the researchers found several ways around this that lead to multiple videos touting debunked DIY abortion remedies that are not only proven to be ineffective, but can also pose serious health risks.
NewsGuard claimed that the social media app vowed to remove this content in July, but “two months later, herbal abortion content continues to be easily accessible on the platform.”
Other standard forms of conspiracy fodder also occupied space in top search results, including claims that the Uvalde school shooting was planned and that the 2020 presidential election was stolen.
TikTok’s Search Engine Vs. Google
As part of its research, NewsGuard compared TikTok’s search results and suggestions with Google and found that, by comparison, the latter “provided higher-quality and less-polarizing results, with far less misinformation.”
“For example, searching ‘covid vaccine’ on Google prompted ‘walk-in covid vaccine,’ ‘which covid vaccine is best,’ and ‘types of covid vaccines,’” NewsGuard wrote. “None of these terms was suggested by TikTok.”
This is significant because recent reports show that young Internet users have increasingly turned to TikTok as a search engine over Google. While this might elicit safe results for pasta recipes and DIY tutorials, for people searching for current affairs, there could be significant consequences.
NewsGuard said that it flagged six videos containing misinformation to TikTok, and the social media app ended up taking those posts down. In a statement to Mashable, the company pledged to fight against misinformation on its platform.
“Our Community Guidelines make clear that we do not allow harmful misinformation, including medical misinformation, and we will remove it from the platform,” the statement said. “We partner with credible voices to elevate authoritative content on topics related to public health, and partner with independent fact-checkers who help us to assess the accuracy of content.”
Over 70 TikTok Creators Boycott Amazon as Workers Protest Conditions and Pay
As the company fends off pressure on both fronts, the Amazon Labor Union continues to back election petitions around the country including one filed Tuesday in upstate New York.
Gen Z Goes to War With Amazon
More than 70 big TikTok creators have pledged not to work with Amazon until it gives in to union workers’ demands, including calls for higher pay, safer working conditions, and increased paid time off.
Twenty-year-old TikToker Elise Joshi, who serves as deputy executive director for the advocacy group organizing the boycott, Gen Z for Change, posted an open letter on Twitter Tuesday.
“Dear Amazon.com,” it reads, “We are a coalition of over 70 TikTok creators with a combined following of 51 million people. Today, August 16th, 2022, we are joining together in solidarity with Amazon workers and union organizers through our People Over Prime Pledge.”
Amazon has refused to recognize the Amazon Labor Union (ALU) since workers voted to unionize at a Staten Island warehouse in April, and it has resisted collective bargaining negotiations.
Although the ALU is not involved in the boycott, its co-founder and interim President Chris Smalls expressed support for it in a statement to The Washington Post, saying, “It’s a good fight to take on because Amazon definitely is afraid of how we used TikTok during our campaigns.”
While the ALU posts videos on TikTok to drum up popular support for the labor movement, Amazon has sought to win large influencers over to its side. In 2017, it launched the Amazon Influencer Program, which offered influencers the opportunity to earn revenue by recommending products in personalized Amazon storefronts.
Last May, the company flew over a dozen Instagram, YouTube, and TikTok stars to a luxurious resort in Mexico.
Emily Rayna Shaw, a TikTok creator with 5.4 million followers who has partnered with Amazon in the past, is participating in the boycott.
“I think their method of offering influencers life-changing payouts to make them feel as if they need to work with them while also refusing to pay their workers behind the scenes is extremely wrong,” she told The Post.
“As an influencer, it’s important to choose the right companies to work with,” said Jackie James, a 19-year-old TikTok creator with 3.4 million followers, who told the outlet she will cease doing deals with Amazon until it changes its ways.
The ALU is demanding that Amazon bump its minimum wage to $30 per hour and stop its union-busting activities.
Slogging Through the ‘Suffocating’ Heat
Amazon is also facing challenges from workers themselves, with some walking out this week at its largest air hub in California, where company-branded planes transport packages to warehouses across the country.
They are asking for the base pay rate to be raised from $17 per hour to $22 per hour.
A group organizing the work stoppage under the name Inland Empire Amazon Workers United said in a statement that over 150 workers participated, but Amazon countered that the true number was only 74.
The Warehouse Worker Resource Center counted 900 workers who signed a petition demanding pay raises.
Inland Empire Amazon Workers United has complained about the “suffocating” heat in the facility, saying that temperatures at the San Bernardino airport reached 95 degrees Fahrenheit or higher for 24 days last month.
Amazon spokesperson Paul Flaningan, however, claimed to CNBC that the temperature never surpassed 77 degrees and said the company respects its workers’ right to voice their opinions.
On Tuesday, the ALU backed another warehouse’s decision to file a petition for a union election in upstate New York, roughly 10 miles outside Albany.
The National Labor Relations Board requires signatures from 30% of employees to trigger an election.