Elizabeth Warren says GameStop stock saga was market ‘manipulation’

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Massachusetts Democratic Sen. Elizabeth Warren said Thursday that US financial regulators must “get up off their rear ends” and devise new restrictions in response to the GameStop stock-buying struggle, claiming the retail investors involved in the saga were manipulating the market.

An array of left- and right-wing populists cheered the GameStop-buying push as retail investors having an opportunity to compete with wealthy hedge funds that were “shorting” the company’s stock. But Warren said it shows the ease of manipulating stock value.

“This should be a warning bell,” Warren said Thursday morning on MSNBC ahead of a House Financial Services Committee hearing featuring the CEOs of companies involved in the struggle.

“What happened with GameStop is not just about GameStop. It is the warning bell that we have a stock market that is subject to manipulation, a stock market that is not functioning,” Warren said.

“And that’s why the SEC needs to get up off their rear ends and put in place the appropriate regulations and then have a spine to go enforce those regulations.”

The House hearing featured the CEOs of message board Reddit, stock-trading platform Robinhood and hedge funds Citadel and Melvin Capital.

Warren previously asked the Securities and Exchange Commission to investigate the boost in GameStop stock, saying it could be driven by “scam artists executing a ‘pump-and-dump’ stock scheme.”

The troubled video game retailer’s stock value soared last month after small-dollar investors banded together on a Reddit forum to reap financial windfalls from hedge funds that were “shorting” the stock, or using an investing strategy that rewards them if the value decreases.

The hedge funds incurred significant losses by predicting declining value for GameStop. Instead, the stock value soared, forcing the hedge funds to pay the new investors the difference. The company’s stock value has returned to its approximate pre-surge price.

Warren said on MSNBC that “technology always opens up new opportunities, including new opportunities for fraud.”

“That’s why the SEC cannot just be a place that says, ‘Oh, we took care of market manipulation,’ and that now they’re done and don’t need to look at it again,” she said.

“Every time somebody’s got a creative new idea, to be able to game the system and get ahead of everyone else, the SEC needs to take a look. It’s all about level playing fields and transparency. Ultimately, that will be good for all of us.”

Warren helped set up the federal Consumer Financial Protection Bureau and is a leader among progressive Democrats. She is controversial among the left wing of the party for refusing to drop out of last year’s Democratic presidential primary, dooming socialist Vermont Sen. Bernie Sanders, who won the popular vote in the first three primary contests before more moderate candidates dropped out to endorse President Biden.

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