Budapest Post

Cum Deo pro Patria et Libertate
Budapest, Europe and world news

After GameStop stock frenzy, 'very little' government can do to regulate trading: Former SEC chairman

After GameStop stock frenzy, 'very little' government can do to regulate trading: Former SEC chairman

Former SEC Chairman Harvey Pitt on whether the GameStop stock saga will lead to market regulations.

Former SEC Chairman Harvey Pitt said the government can do “very little” to regulate trading unless there is clear evidence of intention to manipulate a stock price following the GameStop frenzy.

The trading app Robinhood made headlines in late January after stocks like GameStop and AMC Entertainment saw an unexpected surge in volatility following web postings on the popular Reddit message board WallStreetBets.

Pitt weighed in on the backlash Robinhood received after pausing trading on some stocks during the short squeeze. He told FOX Business’ “Mornings with Maria” that trading restrictions are “critical” due to past market collapses and the app had to “comply with the law.”

HARVEY PITT: “I think there's a lot of misinformation and also a lot of emotion that's entered into the debate. If you start with the fact that people are entitled to speak their minds about a stock and that's a guaranteed right under the First Amendment, the only question here is: Were any of the individuals touting GameStop taking steps to try and artificially inflate the price of the stock? So I think it's a good thing that the SEC has said they will do a complete review and they will try to figure out who was pushing the stock. That's helpful after the fact. But at the end of the day, unless there's clear evidence that someone was deliberately trying to influence the price of the stock, there's very little that the government can do about this.

With respect to the trading restrictions, Robinhood is subject to all sorts of security requirements. And when the massive trading took hold and Robinhood had a lot of customers that were in that market, Robinhood had to put up much more capital to secure the trading activity of its customers. And at some point, the amount became so large that Robinhood decided to shut down trading. The problem that Robinhood faced was that it's a victim of its own success. It clearly pushed people to buy securities and to engage in trading. And it succeeded. Once it succeeded, it created an environment where what took place with GameStop and AMC and other companies could continue. So all of that, in a sense, means that people should look at the system and be sensible about how these things occurred and what disclosures were made.

The laws are somewhat unbalanced. There is great disclosure when a group of investors band together and exceed the 5% threshold in acquiring equity securities. There is far less disclosure of short positions, and the marketplace thrives on information. But apart from that, there's no difference in the fact that in this case, a number of investors wanted to jump on the bandwagon and buy a stock whose fundamentals did not justify the price that the stock was rising to. That's people's God-given right. You can buy anything you want as long as you know all the facts.

Those restrictions are critical because we've seen huge collapses in the marketplace when there isn't enough security for transactions. Robin Hood has to comply with the law. There may be a question about how well its customers knew about these possibilities. But in my view, as I said, Robin Hood was complying with the law and tailoring or tapering down trading is one way to solve that issue.”

AI Disclaimer: An advanced artificial intelligence (AI) system generated the content of this page on its own. This innovative technology conducts extensive research from a variety of reliable sources, performs rigorous fact-checking and verification, cleans up and balances biased or manipulated content, and presents a minimal factual summary that is just enough yet essential for you to function as an informed and educated citizen. Please keep in mind, however, that this system is an evolving technology, and as a result, the article may contain accidental inaccuracies or errors. We urge you to help us improve our site by reporting any inaccuracies you find using the "Contact Us" link at the bottom of this page. Your helpful feedback helps us improve our system and deliver more precise content. When you find an article of interest here, please look for the full and extensive coverage of this topic in traditional news sources, as they are written by professional journalists that we try to support, not replace. We appreciate your understanding and assistance.
Newsletter

Related Articles

0:00
0:00
Close
Centrist Criticism of von der Leyen Resurfaces as she Survives EU Confidence Vote
Trump Announces Coca-Cola to Shift to Cane Sugar in U.S. Production
FIFA Pressured to Rethink World Cup Calendar Due to Climate Change
Zelensky Reshuffles Cabinet to Win Support at Home and in Washington
"Can You Hit Moscow?" Trump Asked Zelensky To Make Putin "Feel The Pain"
Church of England Removes 1991 Sexuality Guidelines from Clergy Selection
Superman Franchise Achieves Success with Latest Release
Hungary's Viktor Orban Rejects Agreements on Illegal Migration
Air India Pilot’s Mental Health Records Under Scrutiny
Jamie Dimon Warns Europe Is Losing Global Competitiveness and Flags Market Complacency
Moonshot AI Unveils Kimi K2: A New Open-Source AI Model
Martha Wells Says Humanity Still Far from True Artificial Intelligence
Nvidia Becomes World’s First Four‑Trillion‑Dollar Company Amid AI Boom
EU Delays Retaliatory Tariffs Amid New U.S. Threats on Imports
Trump Proposes Supplying Arms to Ukraine Through NATO Allies
US Opens First Rare Earth Mine in Over 70 Years in Wyoming
Bitcoin Reaches New Milestone of $116,000
Severe Heatwave Claims 2,300 Lives Across Europe
Declining Beer Consumption Signals Cultural Shift in Germany
Emails Leaked: How Passenger Luggage Became a Side Income for Airport Workers
Polish MEP: “Dear Leftists - China is laughing at you, Russia is laughing, India is laughing”
Western Europe Records Hottest June on Record
BRICS Expands Membership with Indonesia and Ten New Partner Countries
Elon Musk Founds a Party Following a Poll on X: "You Wanted It – You Got It!"
China’s Central Bank Consults European Peers on Low-Rate Strategies
France Requests Airlines to Cut Flights at Paris Airports Amid Planned Air Traffic Controller Strike
Poland Implements Border Checks Amid Growing Migration Tensions
Emirates Airline Expands Market Share with New $20 Million Campaign
Amazon Reaches Milestone with Deployment of One Millionth Robot
Yulia Putintseva Calls for Spectator Ejection at Wimbledon Over Safety Concerns
House Oversight Committee Subpoenas Former Jill Biden Aide Amid Investigation into Alleged Concealment of President Biden's Cognitive Health
Amazon Reaches Major Automation Milestone with Over One Million Robots
Extreme Heat Wave Sweeps Across Europe, Hitting Record Temperatures
Meta Announces Formation of Ambitious AI Unit, Meta Superintelligence Labs
Robots Compete in Football Tournament in China Amid Injuries
China Unveils Miniature Insect-Like Surveillance Drone
Marc Marquez Claims Victory at Dutch Grand Prix Amidst Family Misfortune
Germany Votes to Suspend Family Reunification for Asylum Seekers
Budapest Pride Parade Draws 200,000 Participants Amid Government Ban
Southern Europe Experiences Extreme Heat
Xiaomi's YU7 SUV Launch Garners Record Pre-Orders Amid Market Challenges
Jeff Bezos and Lauren Sanchez's Lavish Wedding in Venice
Russia Launches Largest Air Assault on Ukraine Since Invasion
Massive Anti-Government Protests Erupt in Belgrade
Iran Executes Alleged Israeli Spies and Arrests Hundreds Amid Post-War Crackdown
Hungary's Prime Minister Criticizes NATO's Role in Ukraine
EU TO HUNGARY: LET THEM PRIDE OR PREP FOR SHADE. ORBÁN TO EU: STAY IN YOUR LANE AND FIX YOUR OWN MESS.
Hungarian Scientist to Conduct 30 Research Experiments on the International Space Station
NATO Members Agree to 5% Defense Spending Target by 2035
NATO Leaders Endorse Plan for Increased Defence Spending
×