The U.S. Securities and Alternate Fee (SEC) has promised to evaluate the current occasions surrounding the GameStop (GME) pump and the next restrictions on inventory buying and selling enforced by Robinhood trade, the SEC’s appearing chair and commissioners said on Friday.
“The Fee will intently evaluate actions taken by regulated entities that will drawback traders or in any other case unduly inhibit their capacity to commerce sure securities,” mentioned the SEC, noting, “As all the time, the Fee will work to guard traders, to keep up honest, orderly, and environment friendly markets, and to facilitate capital formation.”
Shedding the “little man’s” belief
Whereas the SEC didn’t point out Robinhood, GameStop, or Reddit immediately, there’s hardly any doubt as to which particular “regulated entity” that “took actions that will drawback traders” the regulator was referring to.
As CryptoSlate reported, Robinhood has not too long ago restricted GME buying and selling on its platform, limiting customers’ capacity to purchase the booming shares. This resolution infuriated each most of the people and politicians from each side of the aisle alike.
Absolutely agree. 👇 https://t.co/rW38zfLYGh
— Ted Cruz (@tedcruz) January 28, 2021
Moreover, finance consultants have been fast to level out that Robinhood’s largest buyer, hedge fund Citadel, can also be an investor in Melvin Capital—a Wall Avenue firm that reportedly suffered an enormous loss because of the pump of GME organized by Reddit group WallStreetBets.
Citadel is an investor in Melvin Capital, which bought run over by Wall Avenue Bets. Citadel can also be Robinhood’s largest buyer. 🤔
— Tyler Winklevoss (@tyler) January 28, 2021
On this gentle, Robinhood’s resolution may’ve simply been interpreted as an try to guard “massive guys” available on the market by proscribing retail traders. Notably, the trade has later additionally restricted crypto buying and selling as “meme coin” DOGE seemingly bought the identical therapy as GameStop’s inventory, surging by 800% in simply in the future.
A sturdy public dialogue
In response to the SEC’s assertion, the regulator is at present “intently monitoring and evaluating the intense worth volatility of sure shares’ buying and selling costs over the previous a number of days.”
“Our core market infrastructure has confirmed resilient underneath the burden of this week’s extraordinary buying and selling volumes. Nonetheless, excessive inventory worth volatility has the potential to show traders to speedy and extreme losses and undermine market confidence,” the SEC said, including, “The Fee will proceed our work on behalf of traders and the markets.”
To that finish, the regulator additionally desires to provoke a “strong” public dialogue on the construction and operation of securities markets that may contain market contributors and traders.
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