SEC Says It's Investigating Stock Mania for Potential Misconduct

[Yo_Mama_Been_Loggin]

Source: Bloomberg

(Bloomberg) -- The U.S. Securities and Exchange Commission, facing intense pressure to respond to the recent mania in the stock market, said it’s seeking to identify potential misconduct and will scrutinize brokerages’ decisions to halt buying that triggered a retail-investor revolt.

The SEC warned traders about engaging in illegal schemes to drive up share prices and said it was working with other regulators, stock exchanges and federal agencies to “identify and pursue potential wrongdoing,” according to a statement released Friday by acting chair Allison Herren Lee and the agency’s commissioners.

The SEC leadership added that the agency “will closely review actions taken by regulated entities that may disadvantage investors or otherwise unduly inhibit their ability to trade certain securities.”

The remarks were the most aggressive yet from Wall Street’s top regulator following a week-long frenzy that has seen small-time investors harness social media to drive up GameStop Corp., AMC Entertainment Holdings Inc. and other stocks, hedge funds get crushed by their short bets, and Robinhood Markets and other brokerages restrict trading in the inflated securities.



Read more: https://www.msn.com/en-us/money/markets/sec-says-its-investigating-stock-mania-for-potential-misconduct/ar-BB1ddbmJ?li=BBnb7Kz

[EarthFirst]

1. So let me see if I understand this...

Six hedge fund managers can meet to discuss strategy over $600 steaks, bourbon & cigars on how to scheme a method to over leverage their short sells...perfectly legal.

Six thousand Reddit users meet online over grilled cheese and Fanta sodas to discuss buy strategy; which just so happens is not advantageous to the above demographic = SEC investigations?

/WSB #ImNotSelling

[BadgerKid]

4. Yep, this retail "collusion" was done publicly

and without insider info. Every e-newsletter is suggesting how the little guys can do their own investing. Well, they just schooled Wall Street. Time for Wall Street to claim that "real" investing can only be done through them.

[Bernardo de La Paz]

13. Laws against collusion are independent of whether it is hidden or in the open. . . . nt

[Bernardo de La Paz]

12. No. You don't understand this. Your premises re cigars, Reddit, and SEC are not valid. . . nt

[Javaman]

21. it's a classic case of the wealthy getting beaten at their own game.

and getting pissed that the hoi palloi figured them out .

[bucolic_frolic]

2. Some were unable to trade ANY securities

because some brokers shut down for most of the day, or much of two days, according to Tweets.

I have my doubts they'll do much about it, or tell us what they do. I think there might be market manipulation and liquidity issues over this market turmoil. Supposedly a hedge fund became insolvent, that hasn't been mentioned again.

[TexasBushwhacker]

3. When will they investigate Perdue and Blondie?

[oioioi]

5. Four legs good, two legs better

[Bernardo de La Paz]

14. Blondie is married to the New York Stock Exchange. . . . nt

[Gore1FL]

6. It's my hope that this results in regulation that ends economy-hurting processes.

There really shouldn't be a way to play the system to the direct detriment of others whether the person be a small investor or hedge fund. I'd like a Stock market that is based on facts and reasonable estimations.

[burrowowl]

8. The stock market is

legalized gambling for the super rich based on emotional thrills for them that sucks up money from the lower classes. After every depression and or recession the rich come out richer and middle class investors come out poorer.

[Gore1FL]

9. That isn't totally true though. It's home to may people's life savings and retirement hopes.

If it were regulated better, we could do away with the rich sponging the poor. We also need to do that with taxation.

[burrowowl]

24. I know of several people who never got back what they lost from the last crash

and 401 k's because had to retire at the wrong time because they lost their jobs.
And as you say retirement hopes. Hope springs eternal in the heart of a fool.

[Gore1FL]

25. I invest and have found it to be a good source of growth an income for retirement.

I made back the black swan of Covid. Not every stock or mutual fund recovered, but diversity allowed a net gain in 2020.

Responsible investment isn't foolish. It may not always work out, but I would rather put 1005 of my money in the stock market than in a mattress.

[Demsrule86]

22. We need to bring back the bucket laws and Glass - Steagall or we will have a panic/depression

every 10 years or so.

[kristofarian]

7. Transaction Tax on Wall St Trading

or Bust.

speculation and profiteering
need to be Taxed just like
when working people are
taxed on their income.

[safeinOhio]

17. Just apply state sales tax to buying and selling stocks.

States could used some cash too.

[Demsrule86]

23. why should work be taxed but essentially gambling with stocks be tax free.

[Miguelito Loveless]

10. I would prefer an insider trading investigation

Into the entire Trump administration. Starting with the people cleared by Trump’s DoJ.

[My Pet Orangutan]

11. What about schemes to drive down share prices,

and send vunerable businesses to the wall?

[Roy Rolling]

15. Short-Selling is Legitimate

Collusion and manipulation are not. If they want to look at manipulation, start with the Donald Trump statements about Chinese trade in 2018 and 2019. Short-sellers took a hit every time Orange Boy said he would *not* implement the tariffs he promised to implement the weeks before.

So, let’s take a look at that. Not just when the masses overwhelm the few this week.

The problem with that “man-bites-dog story, was succinctly told to me by Bob Prechter of Elliot Wave fame. He said capital markets have one purpose, to move capital from the many to the few.

[bucolic_frolic]

19. Yup

once that game was figured out, all you had to do was cycle in and out of China 3x long and short ETFs, YINN and YANG. It was like clockwork.

[oldsoftie]

16. How bout investigating big short sellers who manipulate small company stock.

[bucolic_frolic]

18. manipulation is the issue.

I read somewhere manipulation is illegal. But it's poorly enforced. There are trading rooms online that move followers into and out of stocks every day. One guy said he made $425k in a single day on SunEdison a few years back.

I am guessing they enforce this rarely, and let rules create the semblance of a free market. Selling big blocks of stock goes secondarily to the small investor, for example. An institution can't dump 2 million shares of something at the drop of a hat. They have to meter it out all day. They put a sell side guy with instructions to get the best price he can, and he dumps them all day, trending the stock down.

I don't know if hedge funds, shorting stocks, abuse these rules. But they sure ought to look into it. There's a 2 hour video on YouTube by Anton Kriel, former head of trading at one of the big banks, and he tells how brokerages market accounts to the little guy. Most of these accounts blow up in 6 months. That's the game.

[oldsoftie]

20. Yes & it pisses me off. 2M shares of a company that trades 400M a day is one thing,

But with a company that trades 5m a day its a disaster.