The SEC issued a statement this morning essentially putting everyone on notice. The quote is below but it can be fairly interpreted as stating that it is looking at all regulated entities (Robinhood and other industry participants), market participants (individual investors, hedge funds) and issuers (GameStop, AMC, etc). That's everyone.
- The technical reason why Robinhood and others restricted buying yesterday is being reported as a response to stricter requirements imposed by the DTCC. You can learn more about the DTCC here. “'When volatility increases, portfolio margin requirements increase too,' Wall Street clearinghouse DTCC said in an emailed statement." Here's the list of the DTCC Board of Directors - you may recognize the names of some of their employers, including J.P Morgan Chase, Goldman Sachs, and Morgan Stanley. In fact, they disclose that 13 of the 20 "are participant Directors who represent clearing agency members" and only three are classified as "non-participant Directors";
- The Buffalo News posted an article that appears to be from CNN Business that provides some insight into the WallStreetBets phenomenon. There is a fair amount of discussion in this article about the hazards of WallStreetBets to the individual investor. Interestingly, there is no discussion of anyone intervening on behalf of these individual investors when they lost money in the market;
- GME stock is up around 60% from yesterday's close as of 10:10 am, about 10% off of where it closed on Wednesday afternoon.
The Commission is working closely with our regulatory partners, both across the government and at FINRA and other self-regulatory organizations, including the stock exchanges, to ensure that regulated entities uphold their obligations to protect investors and to identify and pursue potential wrongdoing. The Commission will closely review actions taken by regulated entities that may disadvantage investors or otherwise unduly inhibit their ability to trade certain securities. In addition, we will act to protect retail investors when the facts demonstrate abusive or manipulative trading activity that is prohibited by the federal securities laws. Market participants should be careful to avoid such activity. Likewise, issuers must ensure compliance with the federal securities laws for any contemplated offers or sales of their own securities.