Reddit WallStreetBets Founder Calls GameStop Stock Frenzy A 'Symbolic Movement'
Jaime Rogozinski says he saw the GameStop chaos coming.
"It's fascinating to watch," said the founder and former moderator of WallStreetBets, the now-famous Reddit online forum that recently sent shares of GameStop, AMC and other beleaguered companies soaring in a battle with hedge funds betting the shares would fall.
"This is a great conversation that the whole world is having right now," he said in an interview with All Things Considered.
The amateur day traders who banded together to fuel a short squeeze on the video game retailer, inflicting enormous losses for hedge funds, are part of a "symbolic movement," Rogozinski said.
"It's the democratization of financial markets, it's giving a voice to the people that didn't previously have one," he added.
The rise in free online trading platforms like Robinhood and the instant connection afforded by Internet communities like WallStreetBets combined to create this moment.
Rogozinski, a 39-year-old who now lives in Mexico City, founded the Reddit community in 2012. Back then, while working as an IT consultant in Washington, D.C., he had a "decent disposable income" to play with in the stock market.
He said he was "was looking for a place where we could discuss high-risk, high-return trades with the market. In the absence of finding one, I decided to create it."
In the years following, the Robinhood app transformed the online brokerage industry. With zero trading fees and a game-like interface, the startup made the stock market more accessible to a young user base. By 2019, a wave of online brokerages — including E-Trade, Charles Schwab and TD Ameritrade — had followed Robinhood's model in dropping commissions.
But regulators and Wall Street haven't kept up with the times, Rogozinski said.
He said there are "absurdities" in the market and "a lot of systemic weaknesses." Until now, he said, "nobody's done anything to address it that's been symbolic. And my way of protesting is to try and push it to the extreme."
At the same time, he said he didn't want these scenarios to happen on his watch.
"It's a bit of bittersweet because if I were still moderator, this wouldn't have happened," said Rogozinski, who hasn't been a moderator since last April.
Rogozinski said he has watched members try to game the market en masse before. But, deeming it too much of a legal risk, he said he put a stop to it when questionable behavior arose.
"I had lawyers, I consulted with them, I said, 'I don't know is this legal, is it not legal.' I'm not quite sure. They said, 'Look, you could turn it illegal if you say certain things or do certain things, but it's kind of a gray area, no precedent, '" Rogozinski said.
He chose the conservative route, he said, blocking "all subsequent efforts."
"I didn't want to risk the community," he said.
He shut down a private offshoot forum on the Discord chat app and booted other moderators on the Reddit forum for allowing hate speech to go unchecked, according to The Wall Street Journal.
While Rogozinski said that he's enjoying "watching everything from the sidelines," he doesn't appear to be rooting for any one team.
"You have voices on one side — 'let's protect the little guys' — and you have voices on the other side that said 'the system is breaking,' " he said. "They're both right."
Day traders on Robinhood who drove up GameStop and other stocks exploited a weakness in an archaic financial system, Rogozinski said. Wall Street, initially started as a way to raise capital, has "been slowly creeping away from their original intention," he said.
"Companies that used to go public to raise funds to be able to innovate, ... now they raise funds before they go public and they go public just to pay back the investors," he added.
On the other hand, Rogozinski said, "For too long it's been an invite-only club. And it's been the elites on Wall Street and nobody on Main Street."
What's happening now, he said, invokes the same sentiments of the Occupy Wall Street protests against corporate greed: "It's resurfacing in a kind of poetic justice."
Will Jarvis and Tinbete Ermyas produced and edited this interview for broadcast.
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