Regulators and federal prosecutors are probing potential misconduct in the GameStop trading frenzy, as the Securities and Exchange Commission moves to restore harsher penalties on wrongdoers. Via the Washington Post:
Attorneys in the Justice Department’s criminal division are conducting a wide-ranging investigation into possible market manipulation from the trading surrounding GameStop, and recently issued a subpoena to Robinhood as part of that, a person familiar with the matter said. The probe, though, appears to be in its early stages.
SEC acting chair Allison Herren Lee in a radio interview earlier this month said the agency already is investigating the matter “from a number of different angles, and they’re very significant.”
Specifically, she indicated the agency is looking into whether brokers such as Robinhood complied with regulations when they limited trading in certain so-called “meme stocks.” And she said the agency is looking for signs of market manipulation amid the trading mania. A Robinhood spokesman declined to comment.
Obviously, some big players hopped in to abort the short squeeze, and it would be exactly the wrong message for the feds to go after the small retail investors -- especially after Robinhood cut off sales of the stock.