Rep. Ro Khanna: This exposes a deep flaw in our financial system

lawmakers are demanding answers this hour to training halts today on some of these high-flying names including your next guest he put out a letter today uh titus reading we're done letting hedge fund billionaires treat the stock market like their personal playground then taking their ball home as soon as they lose joining us now is democratic representative ro connor of california congressman welcome to the show great to speak with you thank you for having me there are going to be hearings uh and i'm wondering what you hope to accomplish well this just exposes the deep flaw in our financial system what you have is hedge funds they take out these short bets then they go on television and they tell everyone sell it's total manipulation it's not encouraging productive investment we need to have better regulation and better enforcement on these short sellers and gary gensler i think will do that at the sec is it just short sellers is there something about short selling that attracts this kind of scrutiny because people on the long side of trades do that the same thing and let's be clear when you say manipulate that is not the definition of market manipulation as put forth in securities law well i'm not saying it's inside our trading goal though i need to look at the exactly what happened i do think most americans will think if you're shorting a stock and you have something to gain and then you're going on television and encouraging people to buy to sell uh that stock that that's not helpful and that the people are making a fortune on this some of the laws have to be enforced and we need better regulation over this kind of predatory uh is speculation and then when you have finally sort of investors at reddit uh try to take uh their own action because our system doesn't allow it you have robinhood stop the trading i mean i i don't understand under one authority they aren't violating the terms of their service and they're claiming they have capital requirements what capital requirements they aren't invested personally so what is your message to to the wall street vets community congressman i mean what ultimately do you say you know keep going press them bring wall street to their knees because this is how we show the inequality of the system no they're they're they're americans that have the freedom to do whatever they want my job isn't to tell them how to invest my job is to make sure that they have the same rights as every other american and i don't understand how you can have a service like robin hood which under the terms of service tells people that they can trade and then just stop that those terms and by the way robin hood you can ask the ceo when he comes on makes part of their money by selling this data to the hedge funds so there's something there that they have to gain by listing to the hedge funds now i don't know what their rationale is i do know they put out this statement saying they have capital requirements and sec requirements but i don't understand what requirements they're not personally investing in gamestop it's the investors they're just a neutral platform so how can they just stop suddenly the trades with no notification yeah um i know this it's hard to to sort of you know plot this out congressman but you know in in your view do you think that there will be more regulations being placed on on the likes of a robin hood in the next year or two yes there are going to be three consequences of this there are going to be more regulations on hedge funds and finally i think people are going to say the carried interest loophole needs to go the financial system isn't working people are angry out there at what's going on a second they're going to be regulations on robinhood that you have to be a fair platform but the biggest thing and this is important to i think now 48 of americans are not in the stock market there are many people who want jobs good jobs and this investment isn't helping create our productive capacity it's not building manufacturing it's not building investment we need an economy that's going to build things make things not just speculative bubbles that is not helping 50 percent of americans congressman thanks for joining us thank you representative ro khanna courtney what do you make of this i mean we it sounds like they're intent on trying to change the system they are and regardless of kind of why that's come about you know everything happens kind of in arrears right it would have been great for someone to kind of dug in the fine print sooner but if this is brought to the forefront the need for i won't call it additional regulation because that scares the market but different regulations in order to keep our markets safe for all participants i think everyone would be open to that and i want us to really be clear from a statistical perspective right like let's not sit and pretend by allowing retail investors to participate that they're suddenly going to overthrow the market right we cover institutional investors at my firm and 80 of the assets right 80 percent are held by institutions okay so there's not going to be some overthrowing of the system and everything's going to go to you know what in a hand basket let's be honest about what this means if you can have people participate in the markets however that may be whether it's day trading whether they decide to be long-term investors buy and hold or whether they're traders which we appreciate on this network and in this marketplace they have the ability to participate on a level playing field and i think or at least i hope that's what our legislative individuals and representatives will work to achieve on behalf of of this country so they may not get anywhere with it but ultimately uh it does sound like folks are willing to kind of work across the aisle to think of a better way to provide regulations in our markets shepherd smith here thanks for watching cnbc on youtube

Channel: CNBC Television

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Keywords: Fast Money, CNBC, business news, finance stock, stock market, news channel, news station, breaking news, us news, world news, cable, cable news, finance news, money, money tips, financial news, stock market news, stocks

Id: d0ldvl49nGQ

Length: 6min 14sec (374 seconds)

Published: Fri Jan 29 2021