"It stinks of corruption": US judiciary examines gamestop dispute

"It stinks of corruption"
US judiciary scrutinizes gamestop dispute

After online brokers temporarily restrict trading in Gamestop shares, the outrage is great – not only among small investors. The attorney general in Texas wants to investigate the matter now. Meanwhile, the Robinhood trading platform faces a class action lawsuit.

The first judicial authorities have intervened in the dispute over the speculation in shares of the video game dealer Gamestop and other companies on the US stock exchange. Texas Attorney General Ken Paxton announced on Friday (local time) that he had requested information from Robinhood and a number of other online brokers to find out whether everything was right with the restrictions on trading in shares from Gamestop and a few other companies .

GameStop Corporation 266.10

Apparently there are agreements between hedge funds and trading platforms and web servers to ward off threats to their market dominance. Wall Street companies should not restrict public access to the free market for their own benefit, the prosecutor said. "It stinks of corruption."

In the conflict, there are hedge funds that bet on the decline of shares in troubled companies and hobby investors, some of whom are organized in online forums, who drive prices up with concerted purchases. Due to the trading restrictions of brokers like Robinhood, the small investors, who had the upper hand in the trial of strength, see themselves thwarted on their profit path. Some hedge funds have suffered extremely high losses from their bets, so there is a suspicion that the trading platforms have their backs. Robinhood and Co. deny this, but the outrage is not only great among the investor community, but also in politics. New York Attorney General Letitia James also wants to investigate.

Meanwhile, the capricious prices of the stocks concerned continued lively on the stock exchange. After the trade restrictions from the previous day were at least somewhat relaxed, the papers of Gamestock closed with 68 percent plus, those of the cinema chain AMC, which is also the focus of speculation, increased by 54 percent. But investors are so frustrated with Robinhood that by Friday afternoon (local time), 26,000 of them had already joined a class action lawsuit via a special app.

The US Securities and Exchange Commission had reaffirmed before the start of trading that it would investigate the events surrounding the Gamestop hype. The SEC promised to protect retail investors if the facts point to manipulative trading activities. The supervisory authority will ensure "fair, orderly and efficient markets". In view of the great excitement, the agency set up an extra online form and also urged investors concerned to contact the SEC by email or telephone hotline. According to financial broadcaster CNBC, 4,000 complaints had already been received on Friday afternoon.

. (tagsToTranslate) economy (t) hedge funds (t) Wall Street (t) stock trading (t) USA