The Senate Committee on Banking will hold a hearing on the current state of the stock market ‘after Reddit’s GameStop press sparked a heated debate that pitted small investors against hedge funds.
“American workers have known for years that the Wall Street system has been broken – they are paying the price,” Sen said. Sherrod Brown, the next chair of the committee, wrote in a statement. “It’s time for the SEC and Congress to make the economy work for everyone, not just Wall Street.” It is not clear when the trial may take place or exactly what will be discussed. But so far, several members of Congress have weighed in on the Reddit-fueled GameStop pressure that has led to trade restrictions from major brokerage firms.
In the House, Rep. Maxine Waters, who chairs the Financial Services Committee, said she also plans to hold a hearing. ‘As a first step in exploiting these abusive practices, I will convene a trial to examine the recent activities surrounding GameStop (GME) stocks and other affected stocks, focusing on short selling, online trading platforms, gamification and the systemic impact of it on our capital markets and retail investors, ”she said a statement.
The news of the hearings comes after Robinhood was sued by a class action lawsuit after users were restricted Thursday, of which more than half own GameStop shares. The company said in an update that it would resume “limited purchases of these bonds” from Friday.
Separate, Fox Business reports that Robinhood expects an SEC investigation involving ‘market manipulation’. “The SEC is somehow going to the Reddit boards and trying to figure out who’s shining what, who’s speaking it, and maybe can link it similarly to transactions,” Fox Business’ Charlie Gasparino said, referring to ‘regulatory sources’. He added that such an investigation is likely to be an “impossible” task, as most Reddit users are anonymous.
A Robinhood spokesman did not immediately respond to a request for comment on possible investigations. And although the SEC did not officially weigh Robinhood, Reddit or GameStop, it issued a statement earlier this week stating that it ‘actively monitors market volatility in the options and stock markets’.