Progressive Senators Bernie Sanders and Elizabeth Warren called for action on Sunday to reform Wall Street, rocked by the GameStop soap opera.
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“We need an investigation from the SEC,” the regulator of the US Stock Exchange, Ms. Warren told CNN.
“What’s happening with GameStop only reminds us of what has been going on for years on Wall Street. It is a rigged game. With a set of players who arrive and manipulate the market, ”lamented the Democrat.
“It’s time for the SEC to do its job,” hammered the one called to Congress to oversee the bailout of the financial sector during the 2008 crisis.
“We need more regulations on market manipulation,” she said.
Independent Senator Bernie Sanders has gone in the same direction, tackling a “flawed” system on Wall Street. “I think we have to look very carefully at the kind of illegal activity and the outrageous behavior of investment funds and other players on Wall Street,” he said on ABC.
The title of GameStop has been soaring for a month and in particular this week, an army of amateur investors having decided to buy massively the share of this chain of video game stores, whose financial health and growth prospects however, leave something to be desired.
Struggling for years, GameStop racked up loss after loss and was forced to close stores.
In early 2020, hedge funds convinced of the prospect of GameStop bankruptcy, opened significant short positions betting on bankruptcy.
Short selling consists of selling a stock that is deemed to be overvalued, with the strategy of buying it back later when it is cheaper and pocketing substantial profits.
But it was without counting on young traders, with various motivations, who wanted to help GameStop.
At the same time, in mid-January, GameStop announced that it had improved its accounts thanks to the release of the PS5.
Hence the surge in the price of the GameStop share which forced these “vulture” funds to buy back at a high price the shares they had sold by betting on bankruptcy.
The SEC said in a statement on Friday “to closely monitor and assess the extreme volatility of the price of certain stocks.”
White House economic adviser Brian Deese assured Sunday that the SEC was “focused” to “understand exactly what happened.”
“We are going to look into these problems”, but the “immediate” priority of the Biden administration is the adoption of a plan to help the economy, he said however on CNN, showing much less. resolution than the two senators.