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Pittsburgh Post-Gazette: SEC should look at itself following GameStop flap
ANOTHER VIEW | PITTSBURGH POST-GAZETTE

Pittsburgh Post-Gazette: SEC should look at itself following GameStop flap

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A deep breath, a long pause and a lot more information and consideration are needed before anyone settles firmly on a way forward from the GameStop buying and selling spree that upended Wall Street and its usual power brokers.

In a move that dethroned the self-appointed kings of the stock market, at least temporarily, small investors organized on a social media platform and used an online app to do what the big players have been doing in the course of daily business — they manipulated the market. The grassroots financial insurrection inflated the video game retailer’s stock value in a way that had nothing to do with its true underlying worth.

It was a big spoonful of soup du jour, served by a band of amateur day traders to professional Wall Street hedge fund managers who cook the numbers as a matter of routine when they “short” a company’s value and, thereby, concurrently devalue it.

No one blinks an eye when the big dogs run. But when the little dogs form a pack, the big dogs howl and the supposed leash-holders start wondering about the condition of the straps they thought they had in hand.

As the world ponders the short- and long-term meaning of it all, economic pundits and politicians want an investigation into what some liken to a battle of biblical proportions — an overdue reckoning that showed what happens when the village commoners take on — and take down — the ruling elite.

Jay Sukits, a professor of finance at the Katz School of Business at the University of Pittsburgh, told Pittsburgh Post-Gazette reporter Tim Grant: “It appears to me you have power players who had the market shoved back in their face and now they are complaining about it. This is a situation where the little guys are attacking rich people.

I find it rather comical for these powerful hedge funds to be complaining about a group of individual investors. These are billionaires, and this is like them getting a taste of their own medicine.”

In an uncommon bipartisan chorus of concern, federal lawmakers on both sides of the political aisle want a hearing.

That makes sense.

The first order of business should be a hard look at the Securities and Exchange Commission, which has said regarding GameStop it will be looking for potential wrongdoing.

The SEC, the ultimate market regulator, should look to itself and ask whether GameStop was the fallout of lax regulation and disinterest in ensuring the financial market is more than a rich man’s gambling hall.

If what the GameStop traders did was wrong because they manipulated the market, then the hedge fund managers have been just as wrong when they’ve manipulated the market. SEC, where have you been? The SEC needs to be an economic policymaker, ensuring it oversees a financial market that serves the economic needs of America, not just the wolves of Wall Street.

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