Warren says GameStop saga is latest sign of Wall Street problems
Sen. Elizabeth Warren on Sunday said the GameStop saga is just the latest “ringing of the bell” that there are problems on Wall Street — ones the Securities and Exchange Commission needs to fix.
The Massachusetts Democrat likened today’s stock market to a casino, where she said big-money players are manipulating the markets through measures like pump-and-dump and stock buybacks to inflate stock prices.
“We need a market that is transparent, that is level and that’s open to individual investors. It’s time for the SEC to get off their duffs and do their jobs,” Warren said on CNN’s “State of the Union.”
Warren blamed Reagan-era SEC changes that she said allowed companies to purchase their own stock and manipulate stock prices. She said the SEC has some pending rules on stock manipulation but needs to examine the role companies and hedge funds are playing in the markets.
“Then, they need to put the rules in place to stop it and grow a backbone to enforce those rules,” she said.
The chaos surrounding the trading of GameStop stock has rattled Washington, triggering intense scrutiny of Wall Street, particularly the brokers and hedge funds at the center of the mess. The trading app Robinhood, which has millions of small, often young investors, enraged lawmakers on both sides of the aisle last week when it shut down purchases of GameStop stock for a day, sending share plunging down.
Asked on ABC’s “This Week” to respond to Robinhood’s move, Sen. Bernie Sanders (I-Vt.) reiterated his view that Wall Street’s business model is “fraud,” suggesting the government take a hard look at “illegal activities and outrageous behavior” of hedge funds and other Wall Street players.
The chaos overwhelming Robinhood and other trading platforms is connected to surges in more than a dozen stocks, which appear to be in part driven by users of the social media website Reddit — whose users say they were eager to punish hedge funds that were betting on further declines in struggling companies like GameStop. GameStop’s stock rose 68 percent on Friday, rebounding from Thursday’s drop.
It’s still unclear who all the players are in these trades, Warren said Sunday, and whether there’s “big money on both sides.”
“That’s why we need an SEC investigation,” she said.