- Kevin O’Leary defended Robinhood’s CEO Vlad Tenev on a CBOE webcast Thursday.
- The Shark Tank star said he believes Tenev is trying to stop young traders from “blowing themselves up.”
- O’Leary emphasized restrictions on margin trading, OTC stocks, and other risky strategies on Robinhood as his reasoning.
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Shark Tank’s Kevin O’Leary sat down for a Cboe webcast on Thursday with ARK Invest’s Cathie Wood, Van Eck ETF’s Jan van Eck, and CBOE’s SVP and Global Head of Listings, Laura Morrison, to discuss the latest market trends and news.
In the interview, O’Leary said he had opened up a Robinhood account with $US10,000 ($13,174) to see how the platform works and was surprised by what he found.
The Shark Tank star added that he called Robinhood’s Vlad Tenev the night before Tenev went to testify in front of Congress to offer the CEO “encouragement.”
O’Leary said he believes Tenev’s Robinhood is “innovative” and “educational” and that the CEO has been unfairly criticized. He said that he commends the commission-free trading app because it doesn’t allow risky types of trading that can often lead to big losses for retail investors.
“He’s trying to stop young people who are using the platform to learn even though it’s been gamified, that’s true, from blowing themselves up,” O’Leary said.
Tenev has been repeatedly criticized for his role in the gamification of investing by major outlets, politicians, and retail traders.
On December 16, Massachusetts regulators filed a complaint against Robinhood, alleging that the company uses “strategies such as gamification to encourage and entice continuous and repetitive use of its trading application.”
Tenev had also been accused of helping hedge funds at the expense of retail traders after he restricted trading in certain so-called meme stocks amid a Reddit retail trader boom back on January 28.
In his remarks to Congress, the CEO strongly denied the allegations.
“Any allegation that Robinhood acted to help hedge funds or other special interests to the detriment of our customers is absolutely false and market-distorting rhetoric,” he said. “Our customers are our top priority, particularly the millions of small investors who use our platform every day to invest for their future.”
Tenev’s critics have been so forward that the CEO was forced to stay at a hotel after receiving death threats earlier this month.
Despite the common critiques of the Robinhood chief, Kevin O’Leary said that Tenev is doing all he can to help young traders get into the markets while reducing risks.
“Here’s a fact that I don’t think a lot of people understand. You cannot short stocks on Robinhood. There are many OTC stocks you can’t trade,” O’Leary said. “You can’t use excessive margin, you can’t short stocks on margin.”
The Shark Tank star argued Tenev and Robinhood are doing the right thing by restricting more risky trading strategies on the platform.
“You can really hurt yourself when you start to use tools that you don’t know the power of, and he’s removed that from the platform,” O’Leary said.