- At a Congressional hearing, Reddit CEO Steve Huffman touted the social network's investment advice community.
- The WallStreetBets community on Reddit faced regulatory scrutiny after the GameStop short squeeze.
- Posts on Reddit need to be upvoted by other members, Huffman explained, before they are widely visible.
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Steve Huffman, CEO of the social media site Reddit, told legislators that investing advice on the site was "among the best" in remarks to the House Committee on Financial Services on Thursday.
In response to a question from New Jersey Rep. Josh Gottheimer, a Democrat, about how Reddit moderates forums that involve financial advice or discussion, Huffman pointed out that "people in the United States talk about stocks on Reddit, they talk about it on TV and in magazines."
He continued to say the community moderation system - known on Reddit as "upvoting" or "downvoting" posts -allows users to boost or decrease visibility for posts that they either agree or disagree with. He also said earlier that Reddit's "user base is exceptionally good at sniffing out false information" using this method.
Huffman went on to compare the user-voted posts on Reddit to investment advice on television: "They do, on television, all the time encourage people to make what I would call bad investment decisions."
"On Reddit, I think the investment advice is actually probably among the best because it has to be accepted by many thousands of people before getting that sort of visibility," Huffman said.
One of the traders who gave investment advice on the platform is testifying before Congress today as well. Keith Gill, also known as Roaring Kitty, posted extensively on the Reddit forum WallStreetBets about his lucrative investments in GameStop.
In the weeks since Gamestop's stock price surged amid a Reddit-fueled trading frenzy, Robinhood and many of its partner firms have come under fire for what some lawmakers say is an unfair system that gives large corporations an advantage over retail investors.