Wednesday, April 21, 2021

SEC is looking into Robinhood’s handling of GameStop trading

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

A minimum of in so many phrases. The Securities and Alternate 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 latest 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 buyers and informal observers. 

On the identical time, many level to r/WallStreetBets, the Reddit group united in shopping for and holding Gamestop, for instance of basic 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 alternate options to basic enforcement:

“One other manner of approaching this concern, relatively than going after people, is to concern a 21(a) report as a manner of offering steerage to {the marketplace} and these usually newer buyers as to the SEC’s view on market manipulation and different legal guidelines which will have been relevant to the scenario, much 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 lead to a mass clampdown on subsequent ICOs. 

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