Sen. Elizabeth Warren said Sunday there is too much manipulation in the stock market and not enough regulation, pointing to the debate about GameStop trades as the latest sign of rot on Wall Street.
“It’s a rigged game,” the Massachusetts Democrat told CNN’s “State of the Union.” “It’s a set of players who come in and manipulate the market.”
Last week, a crush of users on the no-fee investment app Robinhood pumped up stocks such as GameStop following calls on social media sites such as Reddit to buy the stocks.
Robinhood subsequently restricted its users from buying certain stocks, including GameStop, AMC Entertainment and BlackBerry, among others, but the platform allowed its users to sell those same stocks.
The episode generated big headlines, with some arguing that average Joe investors gave crafty billionaire investors a taste of their own medicine.
Ms. Warren wrote to Securities and Exchange Commission Acting Chair Allison Herren Lee to request that she review the fluctuation of GameStop’s stock price and explain what the SEC does to address market manipulation. Ms. Warren noted that the video game retailer’s stock was up 1,700% this month and wanted to know what the SEC will do to prevent similar stock-market swings in the future.
Ms. Warren said that wealthy hedge funds and others for years have turned the market into a “casino” instead of a place to raise capital and grow companies.
The senator said regulators need to investigate how all players manipulate the market, pass new rules and have the backbone to enforce them. She also has targeted arbitration deals that make it hard for regular investors to contest moves by their brokers.
“It’s time for the SEC to get off their duffs and do their jobs,” Ms. Warren said. “GameStop is just the latest ringing of the bell we have a real problem on Wall Street and it’s time to fix it.”
• Ryan Lovelace contributed to this report. Disclaimer: Mr. Lovelace is a Robinhood user.