White House Press Secretary Jen Psaki ducks questions about what the Biden administration will do to 'protect the average American investor' amid GameStop controversy

 The White House on Thursday ducked questions about the chaos in the stock market involving GameStop, which has seen its shares skyrocket this week thanks to a group of small investors on Reddit

Over the last few days, a Reddit group called WallStreetBets that boasts some 4.7 million members has been an online rallying spot for those urging people to buy and hold GameStop shares, punishing short sellers by sending prices soaring. 

Robinhood and Interactive Brokers then restricted trading in red-hot GameStop and other stocks that had soared this week. That dealt a blow to the army of retail investors taking on Wall Street professionals and prompted several policymakers to voice their concern. 

As the chaos continued to spiral, CNN's Kaitlan Collins was the first to ask about press secretary Jen Psaki about the controversy. 

'Given all the volatility surrounding Wall Street and GameStop, what is the Biden administration doing to protect the average American investor if there's going to be, potentially a major market correction?'

Psaki dodged the question and instead referred reporters to an SEC statement.  


Press secretary, Jen Psaki (pictured), on Thursday ducked questions about the chaos in the stock market involving GameStop, which has seen its shares skyrocket this week thanks to a group of small investors on Reddit

Press secretary, Jen Psaki (pictured), on Thursday ducked questions about the chaos in the stock market involving GameStop, which has seen its shares skyrocket this week thanks to a group of small investors on Reddit

CNN’s Kaitlan Collins (left) was the first to ask about press secretary Jen Psaki about the controversy. 'What is the Biden administration doing to protect the average American investor if there’s going to be, potentially a major market correction?' Psaki dodged the question

CNN's Kaitlan Collins (left) was the first to ask about press secretary Jen Psaki about the controversy. 'What is the Biden administration doing to protect the average American investor if there's going to be, potentially a major market correction?' Psaki dodged the question

Psaki dodges question on GameStop trade frenzy and market correction
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Collins followed up with: 'Beyond just monitoring it, has he had any conversations with economic officials about what's going on?'

'He's briefed by his economic team frequently,' Psaki said. 'But I don't have anything more to read out for you.'

Psaki again directed reporters to the SEC statement, which was released on Wednesday. 

'We are aware of and actively monitoring the on-going market volatility in the options and equities markets and, consistent with our mission to protect investors and maintain fair, orderly, and efficient markets, we are working with our fellow regulators to assess the situation and review the activities of regulated entities, financial intermediaries, and other market participants,' the SEC wrote. 

Earlier on Thursday Robinhood and Interactive Brokers restricted trading on GameStop's shares, causing them to plummet. 

But the company's shares rebounded in after hours trading, resuming their advances when Robinhood and Interactive Brokers said they planned to lift the restrictions on Friday.

Retail investors, celebrities and policymakers had denounced Thursday's restrictions and participants in online forums seethed, accusing the trading platforms of seeking to protect Wall Street's interests at the expense of smaller investors.

'Robin Hood: a parable about stealing from the rich to give to the poor. Robinhood: an app about protecting the rich from being short squeezed by the poor,' Jake Chervinsky, a lawyer for fintech company Compound, wrote on Twitter.


Robinhood reversed course by the end of the day and said limited trading in the stocks would resume on Friday. 

Shares of retail favorites including GameStop and AMC Entertainment, which erased an early surge on news of the restrictions then rose after hours.

'In order to protect the firm and protect our customers we had to limit buying in these stocks,' Robinhood chief executive Vlad Tenev said in an interview with CNBC.

'We absolutely did not do this at the direction of any market-maker or any hedge fund or anyone we route to or other market participants.'

The restrictions, and their partial reversal, marked a turn in a battle that many have framed as a showdown between hedge funds and other institutions against retail investors.

Coordinating on forums such as Reddit's Wallstreetbets, the small investors forced hedge funds to unwind short positions that had bet on the decline of shares in companies such as GameStop and American Airlines. That activity resulted in a short squeeze that sent the shares soaring.

GameStop, the video game retailer whose 1,700 per cent rally has been at the heart of the slugfest in the past week, initially rallied to more than $480 a share on Thursday, Refinitiv data showed. It closed down around 44 per cent at $193.60

Robinhood and Interactive Brokers restricted trading on GameStop's shares, causing them to plummet. But the company's shares rebounded in after hours trading, resuming their advances when Robinhood and Interactive Brokers said they planned to lift the ban on Friday

Robinhood and Interactive Brokers restricted trading on GameStop's shares, causing them to plummet. But the company's shares rebounded in after hours trading, resuming their advances when Robinhood and Interactive Brokers said they planned to lift the ban on Friday 


AMC's value was cut by nearly half and Koss Corp dropped by around a third.

'The Robinhood ban on those stocks have put a pretty good end to (the rally),' said Dennis Dick, proprietary trader at Bright Trading LLC in Las Vegas. 'Everybody's trying to hit the exit button at the same time.'

Citing market volatility and the need to keep investors informed, Robinhood, a Menlo Park, California-based app, said on a blog that it was halting trading of viral stocks including and raising margin requirements for certain securities.

Two customers sued Robinhood over the trading ban, seeking damages.

Robinhood said in a later post that from Friday it planned to allow limited purchases of these securities.

Some users complained on Twitter that Robinhood had notified them that it was selling their shares, without their consent. A Robinhood spokeswoman did not immediately respond to a request for comment.

Interactive Brokers, another online trading platform, also restricted trading in those stocks.

Robinhood has seen business boom during the coronavirus pandemic as more home-bound consumers took to trading stocks online. The app now counts more than 13 million users.

Social media chatrooms are beginning to resemble the squawk boxes on trading floors as a new generation of retail traders gains influence.

US Senator Sherrod Brown, incoming Democratic chairman of the Senate Banking and Housing Committee, said he will hold a hearing on the current state of the stock market.

'People on Wall Street only care about the rules when they're the ones getting hurt,' Brown said in a statement.

Before its retreat, GameStop briefly became the biggest stock in the Russell 2000 index of small caps, according to Zerohedge.

Lawmakers from both main parties in Congress, including Democrat Alexandria Ocasio-Cortez and Republican Ted Cruz, criticized the decision by Robinhood to restrict retail trading. Robinhood did not respond to requests for comment.

Other stocks swept up in the drama were Canada's First Majestic Silver, Blackberry and Australian nickel and cobalt explorer GME Resources.

JP Morgan named 45 stocks that it said may be susceptible to short squeezes and similar 'fragility events,' including Macerich, Cheesecake Factory and Stitch Fix.

US equity markets rebounded more than 1 per cent on Thursday after the short squeeze on Wednesday fueled a 2 per cent slide in New York's S&P 500 as investors sold other assets to cover their losses.

Short-sellers are sitting on estimated losses of $71billion from positions in US companies this year, data from analytics firm Ortex showed.

Long derided by market professionals as 'dumb money,' the pack of retail traders, some of them former bankers working for themselves, has become an increasingly powerful force worth 20 per cent of equity orders last year, UBS data showed

White House Press Secretary Jen Psaki ducks questions about what the Biden administration will do to 'protect the average American investor' amid GameStop controversy White House Press Secretary Jen Psaki ducks questions about what the Biden administration will do to 'protect the average American investor' amid GameStop controversy Reviewed by STATION GOSSIP on 05:45 Rating: 5

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