Senator Elizabeth Warren on Friday asked the Securities and Exchange Commission to investigate the recent rise in GameStop’s stock price, which was driven by calls for ordinary people to punish hedge funds.
The Massachusetts Democrat raised the possibility that the rise in shares, described as a populist rebellion against Wall Street, could actually be driven by “scammers running a ‘pump-and-dump’ stock scheme.”
“I am deeply concerned that these casino swings in the value of GameStop and other company stocks are yet another example of the skill of the game that interferes with the ‘fair, orderly and efficient’ function of the market,” Warren wrote in a statement. letter to interim SEC chairman Allison Lee.
“I am writing to seek information on how the SEC intends to address these concerns and avoid these and future incidents of possible market manipulation.”
A SEC statement this week that the stock supervisor was reviewing the market battle, along with the stock trading platform Robinhood’s decision to restrict trading, infuriated people on all sides of the political spectrum, from leftists to populists from right, who said the government should instead focus on short-term hedge fund profiteers.
The unprecedented struggle in the stock market was sparked by small investors who joined in a Reddit forum to buy shares in the struggling video game retailer and reap financial profits from hedge funds that were “selling” the shares or using a stock strategy. investment that rewards them if the value decreases.
Hedge funds incurred significant losses by predicting the GameStop value to fall. Instead, GameStop’s stock price skyrocketed, forcing hedge funds to pay the difference to new investors.
Warren, a member of the Senate Banking Committee and a candidate for the 2020 Democratic presidency, wrote that she was concerned with all aspects of the fight, including the “short sale” of Wall Street shares and GameStop’s reaction.
“In addition to GameStop, several other publicly traded companies, including AMC; Blackberry; Bed, bath and beyond; Nokia; and Tootsie Roll Industries, saw major changes in their share prices driven by similar Internet trading schemes, ”wrote Warren.
“These wild fluctuations are just the latest indication that many private equity firms, hedge funds and other investors, large and small, are treating the stock market like a casino, giving little consideration to companies, communities, workers and consumers. that can be affected by these risky bets. The recent chaos reveals a clear distortion in the bond markets, with benefits for investors that do not clearly benefit the company’s workers, consumers or the economy in general. “
Warren continued, quoting a Washington Post article: “With many of these traders hidden in anonymity, there is no way of knowing whether the messages that spread GameStop come from ordinary Joes – or scammers who execute a ‘pump-and-dump scheme of actions ‘. ‘”
Warren is considered a leader among progressive Democrats, but he is controversial among the left wing of the party for refusing to give up last year’s Democratic presidential primaries.
She refused to endorse 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.