Jonathan Ponciano, 29 January 2021
TOPLINE As calls heighten for regulators to investigate the retail trading frenzy–and resulting market madness–spurred by Reddit users this week, Sen. Elizabeth Warren (D-Mass.) is urging the Securities and Exchange Commission, which regulates the stock market, to provide specific details about its investigatory steps–hours after the agency issued a vague statement saying it was still “closely monitoring” the recent market volatility.
Robinhood has been hit with multiple class-action lawsuits related to the trading mayhem. One lawsuit–filed in a New York federal court–alleges the brokerage “abruptly, purposefully, willfully, and knowingly” halted purchases of GameStop to slow its price growth and to deprive traders of the ability to invest in it. The suit further alleged that Robinhood’s actions were “purposefully and knowingly” undertaken “to manipulate the market.” Due to the extraordinarily high number of trades–and the associated costs, Robinhood was forced to raise $1 billion in emergency funds from investors and hundreds of millions of dollars more in credit lines this week
