second of all, i just want to make clear whatever comments i make today, i do not represent finra.ents are only my own. liz: got it. >> i think what i'd be looking for from citadel and ken and the rest of the panelists are really an understanding of what drove their trading. but as you pointed out, the flow coming off of retail platforms like robinhood is primarily interacted with by firms like citadel, by other large market-making firms. there is no way from at least that side of the business they would have any desire or intention to shut that flow off. those are longstanding, lucrative business arrangements that i think they would not want to put at risk by doing anything untoward. liz: do you see it as a conflict of interest, eric? >> a conflict of interest meaning having two sides of their business? liz: well, just that they're actually getting paid by citadel securities, and there's obviously a reason that citadel likes to know the order flow that's going on there, and suddenly the that order flow was shut down at least in part. >> yeah. order flow and payment for order flow

that i have called to the attention of my colleagues >> well, as a former enforcement attorney at finra, i can say that regulators have the same concern with fines and other punishments becoming just a cost of doing business. and it's one of the things that are considered along with the rules and regulations allowed around what can be punished. >> the gentleman's time is up. >> may i, for the record mr. green, as you know, we are going to have a series of hearings and our next panel will include the whole bevy of experts also on some of these issues with that. >> may i say something in the record, please >> without objection, you may enter into the record, thank you. >> thank you >> you're recognized for five minutes. >> thank you, madame chair, and mr. griffin, i want to revisit this issue of payment for order flow payment for order flow has been around for decades, correct? >> i know it's been around for at least one or two decades. i can't answer before that period of time. >> and it's a recognized and approved practice by the s.e.c., correct? >> yes, it is. >> and payment for order

you said earlier, you are with finra, they are under regulation sei. is it appropriate to put some of these trading platforms under that same regulation, which requires them to develop systems and policies that protect the integrity of their systems? mr. schulp: protecting the integrity of systems is important for all trading platforms, not simply the robinhood's of the world. we need to look to make sure there is integrity on the platform. i would agree with that, not necessarily sci in particular, but having platforms that are strong is important. rep, lynch: thank you, i yield back. chair waters: we are having a few technical difficulties and we will be right back, and we are back. miss adams, you are recognized for five minutes. rep. adams: thank you. it has been a very interesting meeting, and i want to thank you for organizing this. ms. schulp, in the case of gamestop and amc, the prevailing narrative has been that a band of reddit inspired folks rose up against a wall street, forced the short squeeze by professional hedge fund managers who were

but i think finra, which is the organization that regulates the brokers and the broker/dealers, they had put out a statement earlier this week, and much more interesting, they're looking this year as to focus on game fication of trading, a very broad topic and includes things like suitability, a loaded term, a legal term and basically says you have to put your investors, investments that are suitable for them and so you have, finra has specifically come out and said we're going to be looking at apps this year that have int akkive elements and looking at apps that provide recommendations, we will be looking at apps that might influence customers to engage in certain sector trading this is all under the suitability rubric are you putting your clients into situations where they're engaging in trading that may not be suitable for them you see this as a real rabbit hole, to potentially go down, and the question is how aggressive do you want to be on the whole suitability question my point is, this is a much more fertile area, if you want aggressive regulation, than trying to figure out if

a new study shines a light on who they are and how they actually trade now the study was by the finraon foundation and the university of chicago. they looked at people who had opened investment accounts for the first time in 2020 most were between 30 and 59 years old, so they're slightly older than that 20-something day trader we hear so much about they're alsomuch more racially diverse. a third are african-american or latino african-americans' share of new investors is actually double that of existing investors now the new investors also is a very small investor. most had account balances of less than $2,000 and a third balances of less than $500 their main reason to start investing was retirement and they were motivated to start investing by low, minimum investing amounts. the rise of no minimum or low minimum accounts may be more important to this new investor than all the free trading we talk so much about now most are not active day traders. they trade less than three times a month. the new investor is less likely to actively trade than existing investors but they need more finan

my colleagues >> is a former enforcement attorney, at finra, i can say that regulators have the same concern with fines and other punishment as the cost of doing business. it's one of the things that are considered along with the regulations around what. can punished >> the gentleman's time has expired. as you know, we are going to have a series of hearings and expand it will include a whole bunch of experts as well on these issues. >> may i say something in the record, please? >> without objection. >> thank you. >> you are recognized for five minutes. >> mr. griffin, want to revisit this issue for payment for order flow. payment for order flow has been around for decades? >> i know it's been around for one or two decades but i don't know before that. >> to recognize an approved practice by the sec, correct. >> yes, it is. >> and payment for order flow is set by the oak ridge firm and not the wholesaler? >> it is ultimately an negotiated number, but it is a number that is set by your required to meet -- you are required to meet at requirements, is that correct? >> in other words mark

department of justice in northern california, we know finra's looking at it, we know elizabeth warren that as many as ten state a.g.s have been inquiring about, to robinhood about the gamestop trading frenzy and what it knew, what it didn't know, its connections with citadel. you know, there's a longstanding conspiracy theory that somehow robinhood put the halt on trading in some of those heavily shorted stocks to benefit hedge funds like citadel. i think the evidence will conclusively prove otherwise as it already has, but still they're asking. so this is a pretty interesting situation for robinhood. we should point out that there are innocent and easy explanations for everything. why it ceased trading gamestop, it didn't have capital on hand to make margin requirements on settlements. its relationship with citadel is pretty arm's length. the more -- it's not, and it's not in their best interests, either of their best interests to cut off trading. they make more money doing that. they're easily explained, that's why i can tell you from inside robinhood the legal staff is pretty confi

pending investigation based on your finra background, do you think the s.e.c. should look at the bulletin board participants under section 9a2 or potentially inducing trading in a certain direction. is that worthy of their review >> thank you for the question, congressman. i think that there's been little evidence to this time that there's been any sort of false or deceptive conduct taking place on the wall street bets forum. that does not mean, though, that i think the s.e.c. should not take a deeper look because of the anonymity in then people that were engaging in deceptive behavior that's not readily apparent to outside, to the public so i do think the s.e.c. should look but to this point i've seen very little that would meet a test for manipulation which generally involves false or deceptive behavior. >> thank you, i appreciate that. mr. tenev, i thought of another question for you, would a securities transaction tax be beneficial to retail investors in the united states >> thank you, congressman. i don't believe it would >> thank you >> gentleman's time h

i think he'll probably pay a fine for violating a finra rule, and maybe he should.ng near the amount he's actually made in the trade. if you look at what he's done it was something that was taken away from him later by bigger forces and he would say i had no idea it would turn into this. so i think we have to give the kids on reddit a chance to make mistakes, be on message boards, say what they want to say. if they're not registered and they don't have the intent of manipulating securities, yeah there's free speech coming into play here. if they're registered, it's different, you don't have free speech. now you have regulatory guidelines you have to adhere to. let's spras the pros from the joes and not give the joes a hard time for learning the market. >> i was never allowed to call myself roaring kitty. >> we call you that. >> thank you. >> that's our name for you. behind the scenes when we're talking, that's what we call you. >> perfect, then from now on i'm going to take that name. kara, josh, thank you both so much. you'll both be watching at noon. and i'll be f

the thing to look out for is the finra, financial regulatory authority, and regulate the broker/dealerey put out a statement the other day, specifically saying 2021, we're going to look at the game-fy cation of trading and this focus includes risks associated with at-based platforms with interactive or game-like futures, that are intended to influence customers, their related forms of marking, and the appropriateness of the activity that theyare amoving clients to undertake through these platforms. the word here is appropriateness. this is where they get you because they're probably going to push some arguments that. so things that are going on are not appropriate for the customers who are using it very, very difficult situation for robinhood and other broker/dealers in generals the gamestop thing is a less of a concern for the markets overall. there is a little bit less systemic risk concerns on. that back to the stimulus. go big on remconciliation a big reason the market is moving and the vaccine rollout. and earnings, halfway through earnings season and if you look at the numbers it

senator elizabeth warren which may signal what to except on the house side warren sent a letter to finraevenue model she is concerned by robinhood's actions around gamestop. she also reached out to citadel ceos ken griffin about its relationship with robinhood and potential conflicts of interest. guys, back to you. >> kate, i am curious, you know, what do you think the bar is for those who are serving as witnesses today? from a litigation standpoint, robinhood, of course, is facing a variety of class-action lawsuits keith gill has his own litigation issues in the state of massachusetts over his other role, his former employer mass mutual, the fact that that wasn't disclosed as he was necessarily touting certain stocks on the internet what do you think the bar is for these gentlemen as they testify today? >> i think the bar is very different depending on who is testifying the witnesses have different topics that they need to tackle. like you mentioned, keith gill is defending his own trade he was sued just yesterday for potentially and allegedly manipulating the stock of gamestop as you s

this is according to a securities filing we just got out about 20 minutes ago the regulator here is finraood says it could have to pay a fine for violating finr's rules. this is both robinhood financial and robinhood securities which was at the center of the gamestop saga. in addition to the fine they say they might have to pay some restitution to customers and they might also have to fire an external compliance consultant as far as the financial hit here, they say probes could lead to losses of at least $26.6 million. and separately, the company is being investigated by the s.e.c. and certain state regulators including new york we reached out to robinhood no further comment on this, guys. back to you. >> kate thank you very much. >>> still to come, it is a critical day for johnons & johnson as an fda advisory panel meets to discuss the company's vaccine candidate. we will speak with dr. scott gottlieb about the prospects of bringing a third vaccine to americans. a quick check on yields. a massive rise in yields of late settling back a little bit today. 1.44 on the ten-year here's aj! whe

will say that when there's this crop of young investors should come new regulations and the fcc and finra when robinhood halted trading, that disrupted the whole market that cannot happen >> right but we now know that they didn't really have much choice based on liquidity, solvency of -- it wasn't -- that wasn't regulation, that was sort of survival for robinhood >> absolutely, but why were they in that position, you know >> right right. right. what are you telling people since they listen to you right now? are you -- i know that -- i see that amc, gamestop, some of these gamefied stocks are on your watch list. what does that mean they're on your watch list? >> well, i have to keep my eye on them, of course that doesn't mean that i am necessarily investing in them, but at mrs. dow jones my goal is to make finance accessible to everyone and i don't want there to be barriers between people and their money. and so, you know, wall street made a big mistake with young investors. they underestimated them, and they were able to rally the market and they also underestimated me at the beginning. n

we're just hearing from elizabeth warren's office that the senator is sending a letter to finra urgingd by robinhood's actions around gamestop that appear to represent an uneven playing field as she says that may harm investors warren is reaching out to ken griffin today and looking at potential conflicts of interest. it gives us a glimpse into what we may see from other lawmakers today. analysts are looking at scrutiny of shutting down the buy side of gamestop we got early copies of the witness testimonies. vlad tenev addressed whether they acted to help hedge funds he says off the top those claims are, quote, absolutely fault and market distorting rhetoric tenev plans to defend how they make money pointing out most retail brokerage firms do get paid in order to offer free trading. the sec has permitted that for decades. joe, back to you. >> kate, thank you let's get to julia boorstin now and what we're expecting from the ceo of reddit today. julia. >> reporter: well, joe, in his prepared testimony steve lutkin defending his role he lays out the rules that prohibit harassment, illegal

. >> so, you said earlier you are with finra. they are under regulation sci. is it appropriate to put some of these trading platforms under that same regulation, which requires them to develop systems and policies that protect the integrity of their systems? ms. schulp: i think protecting the integrity of systems is important for all trading platforms, not simply the robinhoods of the world. we need to look to ensure there is integrity on the platforms. i would agree with that. not necessarily sci in particular, but having platforms that are strong is important here. >> ok. i yield back the balance of my time. >> thank you very much. having technical difficulties. we are back. you are recognized for five minutes. >> thank you, madam chair. it has been a very interesting meeting. i have been wanting to thank you for organizing this. i think it has been very helpful. ms. schulp, let me ask you first of all, in the case of gamestop and amc stocks, the prevailing narrative is a band of folks roosevelt against wall street, -- of folks rose up against wall street. a

. >> so, you said earlier you are with finra. they are under regulation sci. is it appropriate to put some of these trading platforms under that same regulation, which requires them to develop systems and policies that protect the integrity of their systems? ms. schulp: i think protecting the integrity of systems is important for all trading platforms, not simply the robinhoods of the world. we need to look to ensure there is integrity on the platforms. i would agree with that. not necessarily sci in particular, but having platforms that are strong is important here. >> ok. i yield back the balance of my time. >> thank you very much. having technical difficulties. we are back. you are recognized for five minutes. >> thank you, madam chair. it has been a very interesting meeting. i have been wanting to thank you for organizing this. i think it has been very helpful. ms. schulp, let me ask you first of all, in the case of gamestop and amc stocks, the prevailing narrative is a band of folks roosevelt against wall street, -- of folks rose up against wall street. a

should play, what role finra should play.us market participants in reviewing and analyzing what happened. so, the s.e.c. is the primary regulator of the markets in general and of the various exchanges. and then you have finra which is the primary regulator of the actual >> right >> broker/dealers and individuals. >> amy, there's so many different issues here, though, to untangle and to unpack. so i'm just go to be go through them first from the s.e.c. perspective, you look at what's being said on reddit some people say that there's market manipulation going on in that respect and that somehow they should go after those redditers, there are others who say it's prespeech in what they've said. obviously watching the stock come down, there's big questions about investor protection. but what's so unique about the moment, at least some of the investors say we don't want you to be protecting us. it's condescending to do that. what is that with that regard? >> it's a tough one, as you said, if these are everyday people just trading i