featured graphic for Michelle Steel, Congresswoman for California’s 48th District, during COVID-19

Rep. Steel seeks answers on anti-competitive market practices

Rep. Michelle Steel (CA-48) joined her congressional colleagues in a letter to Allison Herren Lee, Acting Chairwoman of the Security and Exchange Commission (SEC), seeking answers into the anti-competitive practices and consumer trading restrictions seen this week by hedge funds and financial trading apps following the surge of stocks like GameStop ($GME). Earlier this week, investors – through trading apps such as Robinhood – bought shares in companies including GameStop, following publicly available news that investors had been short selling the stocks. The stock prices surged, and following pressure from Wall Street, the apps froze the traders’ ability to continue buying on the platform.

“These drastic and potentially illegal market access changes appear to disproportionately benefit large institutional investors at the expense of individual retail investors,” the letter says. “Our interest is in maintaining a fair and equal playing field for all Americans and market participants.”

The Members asked Acting Chairwoman Lee the following questions:

  • Is it appropriate for financial services institutions to restrict the purchase but not the sale of a particular stock in response to market changes spurred by honest and freely available information?
  • More specifically, does a broker preventing a retail investor from purchasing a stock such as GME constitute market manipulation given possible conflicts of interest, and should these sorts of actions be permitted?
  • Will the SEC commit to conducting an investigation to determine whether any of these market access decisions were made after consultation with entities that had a financial interest limiting retail investors’ ability to purchase stock in a specific company?
  • If so, how does the SEC plan on protecting individual retail investors from market manipulation resulting from financial institutions placing restrictions on the purchasing of a specific company’s stock?”

Earlier today, the SEC released a statement saying they would “closely review actions taken by regulated entities that may disadvantage investors or otherwise unduly inhibit their ability to trade certain securities.”

This article was released by the Office of Representative Michelle Steel.