Senator Elizabeth Warren on Friday called on the Securities and Investigation Commission to investigate the recent rise in the price of GameStop shares, which has been prompted by calls for ordinary people to punish hedge funds.
The Massachusetts Democrat raised the possibility that the stock market rally, described as a populist rebellion against Wall Street, could actually be led by “deceptive artists performing a” pumping and unloading “scheme of action.”
“I am deeply concerned that these casino changes in the value of GameStop and other company actions are yet another example of how it interferes with the ‘fair, orderly and efficient’ function of the market,” Warren wrote in a letter. SEC President Allison Lee.
“I am writing to seek information on how the SEC intends to address these concerns and prevent these and future incidents of potential market manipulation.”
An SEC statement this week that the stock supervisor was reviewing the market battle, along with the Robinhood stock trading platform’s decision to restrict trading, angered people across the political spectrum from left to right-wing populists. they said the government should focus on short-term hedge funders.
The unprecedented fight in the stock market was triggered by small dollar investors who joined a Reddit forum to buy shares of the video game retailer and to raise financial failures from hedge funds that “shortened” stock or used an investment strategy that rewards them if the value decreases.
Hedge funds suffered significant losses by predicting a decline in value for GameStop. Instead, the value of GameStop shares rose, forcing hedge funds to pay the difference to new investors.
Warren, a member of the Senate Banking Committee and a 2020 Democratic presidential candidate, wrote that she was concerned about all aspects of the fight, including the “lack” of stock on Wall Street and the GameStop reaction.
“In addition to GameStop, there are several other publicly traded companies, including AMC; Blackberries; Bed, bathroom and beyond; Nokia; and Tootsie Roll Industries, have seen huge changes in share prices, driven by similar trading schemes on the Internet, ”wrote Warren.
“These wild fluctuations are just the latest indication that many private equity firms, hedge funds and other investors, large and small, treat the stock market like a casino, paying little attention to companies, communities, workers and consumers who may be affected by these risky bets. The recent chaos reveals a clear distortion in the securities markets, with benefits accruing to investors who do not clearly benefit the company’s workers, consumers or the economy in general. ”
Warren went on to quote from an article in the Washington Post, “With many of these anonymous traders, there’s no way to know if the messages promoting GameStop come from ordinary Joes – or scam artists who run a scheme. “pump-and-dump” actions. ‘”
Warren is considered a leader among progressive Democrats, but is controversial on the left side of the party because he refused to give up last year’s Democratic presidential mayors.
She refused to support Vermont Socialist Senator Bernie Sanders, who won the popular vote in the first three primary contests, allowing President Biden to unify more moderate voters and win the nomination.