Elizabeth Warren on GameStop: SEC must step down from its duties and do its job

Elizabeth Warren on GameStop: SEC must step down from its duties and do its job

by

“We do not really know who all the players are in all this – whether there is big money on both sides,” Warren Dana Bash said on Sunday on ‘State of the Union’. “That’s why we need an SEC investigation.”

Market viewers were largely sympathetic to traders betting shares on GameStop (GME) after being promoted by a group of Redditors on WallStreetBets, which now has more than 7.5 million followers. Hedge funds and other short sellers have lost large sums of money after betting on the shares that the Redditors targeted.

However, Wall Street also took advantage of the electric boom in GameStop’s inventory. The growth of 1,600% this month is not solely driven by retail investors using free trading programs like Robinhood. Hedge funds that cover their bets and other investors with deep pockets have increased the share price.

Warren notes, for example, that when Robinhood, TD Ameritrade and other brokers began to restrict access AMC (AMC), GameStop and similar stocks, Wall Street players could still trade in these stocks.

She calls Robinhood’s decision to turn the switch and prevent users from buying GameStop in the middle of a trading session just wrong.

“It can not try to help the hedge funds while pretending to help individual investors,” Warren said.

That’s why Warren believes the SEC should investigate the GameStop saga: to ensure that a set of players do not manipulate the market, treat it like a casino, and prevent everyday investors from participating in the free markets.

“Understand: What’s happening with GameStop is just a reminder of what’s been going on on Wall Street for years and years now. It’s a tough game,” she said. “We need a market that is transparent, equal and open to individual investors. It’s time for the SEC to step down from its duties and do its job.”

Warren said Wall Street and Corporate America had benefited from retail investors for years by buying back shares – artificially inflating the value of their stock prices – and by unfair arbitration clauses that favor broker-dealers. She reiterates her call to end the share buyback and calls for a more active and powerful SEC.

The SEC needs to ‘grow a backbone’ and apply its own rules, she said.

“The truth is the hedge funds. A lot of the giant corporations like the fact that markets are not efficient,” she said. “They like to be able to manipulate these markets because they get better returns and lose individual investors.”

.Source