Sen. Elizabeth Warren, D-Mass.
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Senator Elizabeth Warren on Thursday robbed the Securities Commission, blaming the regulator and its failure for a chaotic explosion of market speculation for several days.
“We need an SEC that has clear rules about market manipulation and then has the backbone to go in and enforce those rules,” Warren said. “To have a healthy stock market, you have to have a policeman in rhythm.”
“This should be the SEC,” she added. “They have to step up and do their job.”
The SEC did not immediately respond to CNBC’s request for comment.
The Massachusetts senator joined CNBC after wild oscillations in a handful of shares forced the popular trading app Robinhood to restrict access to high-flying shares at the center of the controversy.
Warren, a longtime Wall Street critic, spoke to CNBC’s “Closing Bell,” while retailers took to Reddit, Twitter and other social media platforms to protest Robinhood’s move to stop trading. But she made it clear that she is not a big fan of Robinhood either.
“Outfits like Robinhood that say, ‘We’ll give you prizes to come join us,'” but then force customers to sign arbitration clauses. “[don’t] it created a healthy market, she said.
These arbitration clauses, she said, protect Robinhood “if it turns out that [it] he really cheated on you. It will never be made public, there will be very little to do. “
The public outcry over Robinhood came after the California brokerage announced earlier Thursday that it would ban customers from buying additional shares of companies, including GameStop, and relocating theater operator AMC Entertainment. It still allows customers to sell shares in their current portfolio.
Investors on the irreversible WallStreetBets Reddit have led an effort to “squeeze” short sellers to cover their bets on such shares and, as a result, have triggered a frenzy of volatile transactions in recent sessions. Many of these retail investors have triggered the short press through Robinhood’s popular trading app.
GameStop video game retailer has grown 250% so far this week, AMC has grown 145%, and headset maker Koss, another “squeeze” target, has grown by as much as 1,100%.
Robinhood’s decision, which he says was motivated by “extraordinary market volatility,” has drawn criticism from both sides of the political aisle.
For her part, Warren said she was skeptical of a narrative that would link the current trading to a classic “David versus Goliath” story that puts a group of retail investors in a colossal empire of hedge funds.
“This is the question: How do you know who is handling the stock right now?” she asked. “Are you completely sure that there are no rich people on both sides? The hedge funds have not moved to the side of those who bid on the GameStop price?”
Rep. Ro Khanna, D-California, a Silicon Valley progressive, called for “more regulation and equality” and questioned the correctness of preventing individuals from buying.
“While retail transactions, in some cases, such as Robinhood, blocked the purchase of GameStop, hedge funds were still allowed to trade shares,” Khanna said.
By purchasing stock options or GameStop or AMC shares, retail investors have forced investors to bet against stocks, known as short sellers and often hedge funds, to hedge their positions by buying shares in an effort. to prevent further losses.
When this happens en masse, it can lead to a cycle of feedback and an increase in the price of a stock.
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