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- The SEC needs heavier regulation to stop hedge funds playing markets to their advantage, Sen. Elizabeth Warren told CNN Sunday.
- “What’s happening with GameStop is just a reminder of what’s been going on on Wall Street now for years, and years and years,” she said. “It’s a rigged game.”
- The SEC should “grow a backbone” and introduce regulation that shifts the balance of power towards individual investors, Warren said.
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In the wake of the GameStop trading frenzy, the Securities and Exchange Commission (SEC) needs to introduce more regulation to prevent hedge funds playing markets to their advantage, according to Sen. Elizabeth Warren.
And it should “grow a backbone” to enforce those rules, she told CNN’s “State of the Union” Sunday.
“We’ve got a real problem on Wall Street, and it’s time to fix it,” she added.
Reddit day traders have banded together to bump up 90s nostalgia stocks, most notably GameStop but also AMC and Nokia, after noticing that hedge funds were short-selling them. GameStop stock has gained massively in recent weeks – from below $5 in late 2020 to a peak of more than $450 per share on Thursday.
Warren wrote to the SEC on Friday, urging it to investigate the ongoing saga and asking how it will prevent similar incidents in the future. New York Senator Chuck Schumer is similarly pushing the SEC to launch an investigation “ASAP.”
In a statement on Wednesday, Warren also slammed hedge funds and investors, saying they've treated the stock market "like their own personal casino." She echoed this on CNN Sunday, saying the current system favors large players rather than individual investors, but noted that "we actually don't know who all the players are in all this" or "whether there's big money on both sides."
The SEC should clamp down on market manipulation and other questionable trading practices, Warren added.
She urged the SEC to reverse regulations introduced under former president Ronald Reagan's administration, which allow companies to buy back their own stock and inflate prices.
"What's happening with GameStop is just a reminder of what's been going on on Wall Street now for years, and years and years," she told CNN Sunday. "It's a rigged game."
Some brokerages, including Robinhood, Charles Schwab, and TD Ameritrade, have responded by restricting purchases in highly volatile stocks. Alongside the hedge funds themselves, these brokerages have come under fire for their decisions, with both politicians and Reddit users saying the moves deliberately disadvantage individual investors.
"We need a market that is transparent, that is level and open to individual investors," she added. "It's time for the SEC to get off their duffs and do their jobs."
Other politicians and influential figures have also spoken out against Wall Street over the past week.
As well as facing backlash from Redditors, who review-bombed the app on the Google Play Store, Robinhood's decision to stop trades of GameStop has also come under fire from the likes of Democratic Rep. Alexandria Ocasio-Cortez, Republican Sen. Ted Cruz, and Tesla's CEO Elon Musk.