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S.E.C. Chair Testifies to House on Gamestop and Market Volatility

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S.E.C. Chair Testifies to House on Gamestop and Market Volatility

The House Committee on Financial Services held a virtual hearing on short-sellers, social media, and retail investors. The hearing came in response to the March surge in Gamestop stock and the market volatility that ensued.

“Today, social media tools have far greater reach, scale and anonymity than previous technology. This raises the possibility that wrongdoers will attempt to use their powerful forums to hype certain stocks or manipulate markets. I’m not concerned about regular investors exercising their free speech rights online. I’m more concerned whether bad actors potentially take advantage of influential platforms.” “Our markets are dynamic and continually evolving. Market participants constantly innovate new technologies, methods of communication and investment products and services. These innovations often benefit investors, such as by providing easier access to the markets, lower costs and a wider range of investment products and services to choose from.” “As you look at this issue, what steps can you outline to bring regulatory clarity so that we can have a vibrant digital asset marketplace with legitimate money and the rule of law?” “Well, I thank you for asking that. And I think that this market, which is close to $2 trillion cryptoasset market, is one that could benefit from greater investor protection within the S.E.C.’s current authorities, our authorities around securities.” “The real question, who is held accountable when that investment advice leads to market volatility like we’ve seen, and massive losses for our investors?” “In July of next year, brokers will be required to report the personally identifiable information of every retail investor to the consolidated audit trail. While, there are certainly times when the S.E.C. needs to access investor data, this massive database will be a major target for cybercriminals. That’s why I proposed legislation that would require the S.E.C. to instead obtain this data by requesting it from the broker to make sure the S.E.C. is able to quickly access the data it needs.”

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