US senators call for action against Wall Street abuses
US Senators Bernie Sanders and Elizabeth Warren have called for action against the Wall Street abuses by hedge funds exposed by the recent scandal over GameStop shares.
"We need an SEC investigation," Warren said on Sunday, referring to the federal Securities and Exchange Commission.
"What's happening with GameStop is just a reminder of what's been going on Wall Street now for years," the Democratic senator from Massachusetts said.
"It's a rigged game, and it's been a set of players who come in and manipulate the market,” she added.
The brawl between amateur investors and Wall Street professionals began with hedge funds and big corporations shortening the stock or betting on several small companies share prices falling.
The development captivated people's attention on social media and in the wake of it, online campaigns led to the buying of the company's stock, with the aim of pushing up the price.
Companies like GameStop were shorted up by hedge funds, and were labelled as failing by big investors. However, the online movement caused a dramatic soar in prices with its stock trading between $112 and $480 a share, up from around $18 a share a few weeks earlier.
The SEC said on Friday that it was "closely monitoring and evaluating the extreme price volatility of certain stocks' trading prices" and would "act to protect retail investors when the facts demonstrate abusive or manipulative trading activity that is prohibited" by federal law.
But Senator Warren called for more decisive action against the Wall Street abuses.
"It is time for the SEC to get off their duffs and do their jobs," said Warren. "We need more regulation about market manipulation."
Independent senator Bernie Sanders also blasted Wall Street hedge funds and big corporations over shortening the stocks.
"I have long believed that the business model of Wall Street is flawed," he told ABC's "This Week."
"We have to take a very hard look at the kind of illegal activities and outrageous behavior on the part of the hedge funds and other Wall Street players."
The war between amateur investors and Wall Street has caused mayhem in the US stock market with professional investors who are calling the stock movements being obviously disconnected from fundamentals.
On Thursday, Senator Warren, a former law professor at Harvard University, said that the US stock market has become a “playground for the billionaires.”
She said the stock market is like a "casino" and is not reflective of the state of the economy during an interview on CNBC.
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