Warren blamed the SEC’s changes in the Reagan era for allowing companies to buy their own stocks and manipulate stock prices. She said the SEC has some outstanding stock manipulation rules but needs to investigate the role corporations and hedge funds play in the markets.
“Then they have to put the rules in place to stop them and build a backbone to enforce those rules,” she said.
The chaos surrounding GameStop stock trading has rocked Washington and sparked an intense scrutiny of Wall Street, particularly brokers and hedge funds at the center of the chaos. Trading app Robinhood, which has millions of tiny, often young, investors last week enraged lawmakers on both sides of the aisle when it stopped buying GameStop stock for a day and brought the stock to its knees.
Sen. Bernie Sanders (I-Vt.), Asked on ABC’s “This Week” to respond to Robinhood’s move, reiterated his view that Wall Street’s business model was “a fraud” and suggested that the government ” “Examines” illegal activity and outrageous behavior by hedge funds and other Wall Street gamblers.
The chaos that is overwhelming Robinhood and other trading platforms has been linked to a rise in more than a dozen stocks, some of which appear to be driven by users of the social media website Reddit – whose users say they were dying to punish hedge funds, On which was further bet declines in companies like GameStop. GameStop’s stock rose 68 percent on Friday and bounced back from Thursday’s decline.
It is still unclear who all of the players in these trades are, Warren said on Sunday, and whether there is “big money on both sides”.
“That’s why we need an SEC investigation,” she said.