Rep. Axne: Robinhood, trading platforms have responsibility to protect investors
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Rep. Cindy Axne (D., Iowa), a member of the House Financial Services Committee, says Congress needs to look into the "gamification" of investing, in light of the GameStop (GME) saga in January.
"Whether it was my 18-year-old nephew and his buddies who stayed up until four in the morning, trying to get a piece of the action or one of my colleagues whose constituent lost $30,000," said Axne in an interview with Yahoo Finance. "This is a problem for America."
Axne told Yahoo Finance ahead of the hearing that she'll focus most of her questions to Robinhood CEO Vlad Tenev and how the company ensures retail investors know what they're getting into.
"I'm not saying that we should do away with trading platforms like this, but I certainly think they have a responsibility just like other brokers have in providing appropriate information and education and making sure that they protect the investor," said Axne. "I don't know if I'm seeing that out of platforms like Robinhood."
[Read more: A guide to the GameStop hearings]
Tenev defended the company in his opening remarks, saying Robinhood doesn't allow short selling or other risky products and activities on its platform, and just 2% of its customers would be considered day traders.
"Contrary to some very misleading and highly uninformed reports, we see evidence that most of our customers are investing for the long-term," said Tenev. "We've always recognized the responsibility that comes with helping people invest. We'll continue to enhance our educational platform to help customers no matter where they are in their financial journey."
[Read more: Why ‘viral stocks’ are here to stay]
Axne pointed to a survey from Yahoo Finance and the Harris Poll that found 28% of American adults bought GameStop or other viral stocks in January, and said Congress needs to find out why so many people decided to purchase the volatile stocks.
"This is not where we should be in this country that a get rich quick scheme is the solution to so many people's problems," said Axne. "It just shows the exacerbated inequality that continues to grow in this country — and we need to look at all of our tools for financial equity and ensure that they're working for people. We can not continue down this vein of inequity."
Jessica Smith is chief political correspondent for Yahoo Finance, based in Washington, D.C. Follow her on Twitter at @JessicaASmith8.
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