Elizabeth Warren Has Also Heard of a Little Thing Called GameStop

Elizabeth Warren Has Also Heard of a Little Thing Called GameStop
Image:Drew Angerer (Getty Images)

Senator Elizabeth Warren appeared on CNBC’s Closing Bell to have a little chat about the hot topics of the day, namely the absolutely wild fuckery happening with the stock market this week. A quick rundown on what exactly is happening: The internet came together in the strangest way possible to increase the value of GameStop’s shares, in an attempt to break a short play being run on the company by hedge funds. The internet, which never loses, was winning so hard that the fintech investment app RobinHood blocked users from purchasing shares of GameStop and AMC. Why did Robinhood do that? Because Robinhood gets most of its money from brokerage firms, who fold the average Jane’s 10$ partial investment in Apple into a larger multi-share move that can run in the hundreds of thousands in order to maximize returns for billionaire investors who are having their portfolios managed by the hedge funds. Make sense? No? Good, it’s not supposed to.

Warren, worked up over Robinhood’s tactics of blocking free trade, said, “We need an SEC that has clear rules about market manipulation and then has the backbone to get in and enforce those rules.” Then she got to the real core of the Robinhood issue: the arbitration clause in end-user agreements. When it comes to Robinhood, which is a free service for anyone looking to dabble in investing, the product is not the ability to invest. The product is the user base, and the real customers are the hedge funds. This is likely explained in the user agreement, which not a soul on earth will read. Warren pointed out that the agreement contains an arbitration clause designed to keep Robinhood safe and financially viable, saying, “if it turns out that [it] really did cheat you. It’ll never be made public, there will be very little that you can do about it.”

On Robinhood’s side of it, their claim is that blocking the purchase but not the sale of some stocks was a reaction to market volatility. To that I ask, when is the market not volatile? Warren also wasn’t buying this absolute malarky and alluded that what Robinhood and companies that offer a similar service are doing might be “market manipulation.”

“How do you know who’s manipulating the stock at this point,” she asked. “Are you entirely sure that there aren’t wealthy people on both sides?” Fair point, considering that there is absolutely nothing stopping wealth managers from switching sides because they are not limited to apps like Robinhood. It’s because they fucking have money—which has bought them the time to understand, in-depth, how best to operate a market that deals in imaginary sums of money but somehow controls the entire global economic system.

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