Of Course, Biden's Treasury Secretary Has Connections to Hedge Fund Thrashed by Populist Trading

Posted: Jan 28, 2021 8:35 PM
Of Course, Biden's Treasury Secretary Has Connections to Hedge Fund Thrashed by Populist Trading

Source: AP Photo/Richard Drew

The wealthy and well-connected will protect themselves. Over the past few days, they’ve certainly done that on Wall Street. Since time began, hedge funds have worked and coordinated with one another on securities they’ve targeted. These pump and dump operations have gone on and one for years, decades really. It’s nothing new. Yet, this form of market manipulation is now a problem. It’s an issue because normal people committed the awful crime of making money. They made money by using the same schemes as the big wigs. It was the ‘Reddit Rebellion.’ It was populism engulfing the market—and the elites hated it. There’s always a risk when playing the market. It’s another thing entirely when the spigot is turned off by the powers that be—and folks have their trading options limited. 

It all started when GameStop’s stock went through the roof. 

‘WallStreetBets’ was the subreddit thread that started it all. The big wigs bet GameStock would drop. The people said the opposite, the stock price rose, and the billionaire’s club lost mountains of cash. Mets owner Steve Cohen’s hedge fund took a big-league haircut. Today, the Robinhood trading app limited buying abilities for its users who were participating in this financial ‘storming of the Bastille,’ but they weren’t the only ones gumming up the works (via NBC News):

In a day of wild trading, GameStop’s stock opened at $350, shot to $469, plunged to $115, then climbed and fell several times to rest at just over $230 by early afternoon.

On Thursday morning, Robinhood — which says it has more than 13 million users — announced that “in light of recent volatility,” the stock and several others would be restricted, only allowing traders to close their positions, which would allow them to sell but not buy more shares.

“We’re humbled to have helped many people invest in the markets for the first time,” the company said in a statement released on its blog. “And we’re determined to provide new and experienced investors with the tools and resources to help them invest responsibly for their long-term financial futures.”

However, furious users complained online that they were unable to transfer funds to their bank account or to other trading platforms that had not restricted the stocks. Robinhood did not immediately respond to a request for comment.

The stocks included AMC, BlackBerry, Bed Bath & Beyond, Express, GameStop, Koss, Naked Brand Group and Nokia. Traders will only be able to close their positions, the company said.

Other online exchanges, AmeriTrade, Interactive Brokers, and Webull also said they were restricting trades of the hot stocks. Brokerage Charles Schwab said it was increasing margin requirements.

It’s caught the eye of Congress as well. This will be followed up at the federal level. A hedge fund that got walloped by the GameStop surge had ties to Janet Yellen, Biden’s treasury secretary. In fact, she was paid nearly $1 million in speaking fees as well. Something is going to happen (via Daily Caller):

Treasury Sec. Janet Yellen received more than $800,000 in speaking fees from a hedge fund that has become embroiled in the saga over stock trades for video game retailer GameStop, according to her financial disclosures.

Citadel, a hedge fund founded by Ken Griffin, a major GOP donor, paid Yellen $810,000 to speak at several events from October 2019 to October 2020, according to Yellen’s filings with the Office of Government Ethics.

The Chicago-based hedge fund paid Yellen $292,500 for a speech on Oct. 17, 2019, $180,000 for one on Dec. 3, 2019, and $337,500 to speak at a series of webinars held from Oct. 9-27, 2020.

Citadel is invested heavily in Melvin Capital, a hedge fund that was reportedly on the brink of bankruptcy this week due to a surge in GameStop share prices.


White House press secretary Jen Psaki said Wednesday that Yellen, who was confirmed by the Senate on Monday, is “monitoring the situation.”

I’m sure she is, folks. I’m sure she is.