Legislators have responded to the madness concerning Gamestop and AMC stocks and the derivatives trading of hedge funds.
Outraged at Robinhood's closure of trading on Gamestop stock, both the Senate and the House are convening hearings to discuss short selling and the state of the stock market. https://t.co/kj8vM2hUjn — Cointelegraph (@Cointelegraph) January 28, 2021
The Chairwoman of the House Financial Services Committee, Maxine Waters, confirmed an upcoming short-selling hearing on Jan. 28. The incoming chairman of the Senate Banking Committee, Sherrod Brown, likewise advocated for a re-evaluation of the laws of the stock market.
Short selling has been the focus of numerous debates because certain stocks, particularly Gamestop, have seen crazy variance within the past two days (GME). In the face of shortly expiring short positions from several major hedge funds, retail traders, interacting via Reddit and buying from Robinhood, have been busy picking up GME.
Earlier today, in what many have considered unfair collusion with the hedge funds in question, Robinhood and a variety of other outlets targeted at retail investors canceled GME purchases. Waters replied:
This is unacceptable. We now need to know more about @RobinhoodApp’s decision to block retail investors from purchasing stock while hedge funds are freely able to trade the stock as they see fit. As a member of the Financial Services Cmte, I’d support a hearing if necessary.
In his statement, Sherrod Brown shared a common viewpoint:
“People on Wall Street only care about the rules when they’re the ones getting hurt.”
Because of its practice of re-routing instructions to fund managers who paid the company back for the company, Robinhood has been in the judicial spot light. For $65 million, they resolved proceedings with the Securities and Exchange Commission.
The market turmoil of today appears to have attracted enough publicity to warrant a sea change in securities laws as they employ to retail and institutional investors differently.