“We don’t really know who all the players are in all of this – if there is a lot of money on both sides,” Warren told Dana Bash in “State of the Union” on Sunday. “That’s why we need an SEC investigation.”
Still, Wall Street also took advantage of the electrical surge in GameStop’s stock. Its 1,600% growth this month was not driven exclusively by retail investors using free trading apps, like Robinhood. The hedge funds that cover your bets and other investors with deep pockets have helped to raise the stock price.
She called Robinhood’s decision to turn the switch and prevent users from buying GameStop in the middle of a “just wrong” trading session.
“He cannot be trying to help hedge funds while pretending to help individual investors,” said Warren, admitting that he is not sure if this is what Robinhood was doing – there is not enough information in an opaque market.
“Understand: what is happening with GameStop is just a reminder of what has been happening on Wall Street for years, and years and years. It is a fraudulent game,” she said. “We need a market that is transparent, level and open to individual investors. It is time for the SEC to give a hand and hope to do its job.”
Warren said Wall Street and Corporate America have taken advantage of retail investors through repurchasing shares for years – artificially inflating the value of their shares – and through unfair arbitrage clauses that benefit brokers. She reiterated her call to end share buybacks and called for a more active and energetic SEC.
The SEC must “develop a backbone” and enforce its own rules, she said.
“The truth is that hedge funds, many of the big corporations love the fact that the markets are not efficient,” she said. “They love being able to manipulate these markets because they get better returns and individual investors lose.”