WA GOP lawmaker calls for investigation into GameStop stock controversy
Feb 1, 2021, 2:13 PM | Updated: Feb 2, 2021, 7:14 am
WA Rep. Jaime Herrera Beutler. (Getty Images)
(Getty Images)
Last week, financial services restricted trading on GameStop stocks after a group of Reddit users enacted a massive buy-in that inflated the company’s value and crippled large hedge funds. Now, Washington Rep. Jaime Herrera Beutler is joining a call for answers from the SEC over why that restriction on trading was allowed to occur.
Explainer: Why GameStop’s stock surge is shaking Wall Street
The saga began when Reddit users rallied together to buy up GameStop stocks, which, on Jan. 7, sat at $18 a share. Just 20 days later, the company’s stock price had soared to $347 a share. Hedge funds who had bet on the company’s stock prices staying low stood to lose millions of dollars in the fallout, leading to trading platforms like Robinhood attempting to temporarily slow trading on GameStop shares while the dust settled.
Many decried that move from trading platforms as an attack on middle class outsiders, who claimed they were merely taking advantage of a system that hedge funds have reaped the benefits of for decades.
“Americans deserve integrity in our financial markets, but it appears some brokerage platforms may have broken the law by putting their thumb on the scale to protect privileged Wall Street investors over small individual investors,” Rep. Herrera Beutler said in a written release.
I joined with Democrats and Republicans in demanding answers from the SEC (see link), and I believe a formal investigation into the entities that restricted the purchase of these stocks is warranted. (2/2) https://t.co/tsBtYWnIeN
— Jaime Herrera Beutler (@HerreraBeutler) January 29, 2021
Seattle CEO: GameStop stock controversy goes beyond Wall Street
Last Friday, Herrera Beutler joined a bipartisan group of 17 members of Congress in labeling the trading slowdown as “drastic and potentially illegal market access changes to disproportionately benefit large institutional investors at the expensive of individual retail investors.”
The group of lawmakers hopes to get answers from the SEC to a series of questions regarding how it plans to address the incident, and is aiming to launch a formal investigation into the trading platforms that restricted the purchase of stocks targeted by Reddit users for large-scale buy-ins.
