The SEC Will review Robinhood’s actions that were taken against Gamestop and the trading of its stocks on its platform. Robinhood decided to restrict stock trading on its app so now the SEC chair and commissioners will look into it some more as we can see more in our latest cryptocurrency news.
The SEC noted:
“The Commission will closely review actions taken by regulated entities that may disadvantage investors or otherwise unduly inhibit their ability to trade certain securities. As always, the Commission will work to protect investors, to maintain fair, orderly, and efficient markets, and to facilitate capital formation.”
The SEC didn’t mention Robinhood, Gamestop, or Reddit but there’s no doubt as to which “Regulated entity” it will be taking actions against that could disadvantage investors. Robinhood recently restricted GME trading on its platform and limited the users’ ability to purchase the booming shares. The decision made the general public and the politicians from both sides of the aisle quite furious:
“Fully agree. 👇 https://t.co/rW38zfLYGh
— Ted Cruz (@tedcruz) January 28, 2021”
Finance experts pointed out that the company’s biggest customer, Hedge fund Citadel, is a huge investor in Melvin Capital which was the Wall Street company that suffered a huge loss thanks to the boost of GME organized by the Reddit members. The SEC will review Robinhood’s actions because its decision could have been interpreted as an attempt to try and protected the big investors by restricting the retail ones. The exchange limited crypto trading as well once DOGE got the same treatment as Gamestop’s stock and surged 800% in one day.
Citadel is an investor in Melvin Capital, which got run over by Wall Street Bets. Citadel is also Robinhood's biggest customer. 🤔
— Tyler Winklevoss (@tyler) January 28, 2021
According to the SEC statement, the regulator will monitor and evaluate the price volatility of the stocks and trading prices in the past week:
“Our core market infrastructure has proven resilient under the weight of this week’s extraordinary trading volumes. Nevertheless, extreme stock price volatility has the potential to expose investors to rapid and severe losses and undermine market confidence. The Commission will continue our work on behalf of investors and the markets.”
The regulator also wants to start a “robust” public dialogue on the structure of the operation of securities markets which will involve market participants and investors as well.
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