Sen. Elizabeth Warren on Wall Street

Sen. Elizabeth Warren on Wall Street

In recent days, American financial markets have been gripped by the saga of a video game retailer's soaring stock price.

Warren said Wall Street and Corporate America have taken advantage of retail investors through share buybacks for years - artificially inflating the value of their stock prices - and through unfair arbitration clauses that benefit broker-dealers.

He added: "It's a wonderful opportunity for people to make money - everyone's bored and locked up - but just be careful and make sure whatever you invest in these type of hot stocks, make sure you invest only what you can afford to lose".

Andrews says Wall Street has been susceptible to that type of thing before, but not on this scale.

Short-selling: Short selling is a method of making a profit by betting on a stock that one knows will fall. "Investors should also be wary of discussions in these social media chatrooms that may trigger securities breaches such as the provision of investment advice or stock recommendations without a licence".

A prominent hedge fund has a pool of investment which allows the investor to invest aggressively.

Elon Musk endorsed the subreddit r/wallstreetbets, specialised Reddit forum in which small retail investors were interested in similar stocks.

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"What's happening with GameStop only reminds us of what has been going on for years on Wall Street".

Founded by Gabe Plotkin, a former portfolio manager for Steven Cohen, Melvin now manages more than $8 billion, including $2.75 billion in funds that Citadel LLC and Cohen's Point72 Asset Management put into the hedge fund last week.

New and existing clients signed up to invest additional funds into Melvin Capital on February 1, the Journal reported, but the firm would not disclose how much.

Moreover, many Short sellers lost around $23.6 billion on Gamestop in this frenzy.

There were also claims that it had gone bankrupt which were later denied by the company's spokesperson.

Online trading platform IG Group Holdings Plc said on Saturday it will restrict any new positions on GameStop Corp and AMC Entertainment due to "extreme volatility" in the market.

As a result, the incident led to a massive backlash on social media as move appeared as market manipulation by certain large hedge funds to minimise their losses and keep others out.

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