“How free exactly is the market?” asks Jaime Rogozinski, the founder of WallStreetBets, the forum on Reddit at the center of the GameStop (GME) saga.
Robinhood, Interactive Brokers and other brokerage firms on Thursday restricted trading on stocks going through recent massive short squeezes like GameStop and AMC Theaters (AMC).
“Why are the brokers taking actions? What are the forces behind it? Obviously they’re pressured under it. It doesn’t make sense for Robinhood to do something like that given their target demographic,” Rogozinski told Yahoo Finance Live.
“Those people are effectively now controlling the price of the market as well,” he added.
[Read More: Analyst on GameStop volatility: 'If you want to gamble, go to the casino']
Rogozinski says the SEC should try to stabilize the situation.
“I do believe that they have a responsibility to do something about it. The thing that I question is whether they have the tools to do it both, either regulatory — as far as per rules are established, and/or the resources,” she said.
“The fact that they're having brokers step in, it says volumes to me as opposed to SEC,” he added.
Rogozinski tells Yahoo Finance he has not been a moderator of WSB since April of last year, and is not trading any of the volatile, heavily shorted stocks recently experiencing short squeezes.
The Securities and Exchange Commission put out a statement on Wednesday saying it was “monitoring the ongoing market volatility”. It’s unclear what the agency could do, and one law professor told Yahoo Finance the case could pose a “super weird” challenge.
Ines covers the U.S. stock market. Follow her on Twitter at @ines_ferre
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