SEC is looking into Robinhood’s handling of GameStop trading

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The U.S. securities watchdog is wanting into the affair of Robinhood and the Redditors.

A minimum of in so many phrases. The Securities and Change Fee made a joint statement on Friday expressing concern over the “excessive worth volatility of sure shares’ buying and selling costs over the previous a number of days.”

Although the fee did not use the phrases “GameStop,” “Robinhood,” or “Reddit,” it is apparent that what the fee is speaking about is the current chaos surrounding the three. It is already attracted major regulatory pressure. The SEC did, however, specify:

“The Commission will closely review actions taken by regulated entities that may disadvantage investors or otherwise unduly inhibit their ability to trade certain securities.”

Robinhood, already the subject of enormous backlash from its users, is clearly in the sights of this announcement, as it is the “regulated entity” i.e. broker-dealer at the heart of the news. It is not unprecedented for Robinhood to shut down trading on GME and other stocks, but the firm’s shutting off of sales but not buys provoked mass ire from traders and informal observers. 

On the similar time, many level to r/WallStreetBets, the Reddit group united in shopping for and holding Gamestop, for example of traditional market manipulation or different securities regulation violations in a brand new media venue. Marc Powers, previously of the SEC’s enforcement workplace and presently an adjunct professor on blockchain regulation at Florida Worldwide College, defended this view, however put ahead options to traditional enforcement:

“One other approach of approaching this concern, somewhat than going after people, is to concern a 21(a) report as a approach of offering steerage to {the marketplace} and these usually newer traders as to the SEC’s view on market manipulation and different legal guidelines that will have been relevant to the state of affairs, just like what the SEC did with the issuance of the DAO report involving ICO in July 2017.”

Powers was referring to the SEC’s preliminary entry into preliminary coin choices, which shunned enforcement on the time however did end in a mass clampdown on subsequent ICOs. 

However, possibly it is a results of a Home, Senate and Presidency abruptly underneath Democratic rule and wanting to roll again the pro-Wall Avenue legacy of the previous 4 years, however only a few on the federal degree are critically speaking about doing something in regards to the redditors.