Danielle O’Brien, Staff
As of last Thursday, chaos has consumed Wall Street in what seems to be a war between multi-million dollar hedge fund holders and retail stock holders. If you lack an account with the popular social media platforms, TikTok or Reddit, this ongoing battle may appear nonexistent. Essentially, the hedge funds of Wall Street planned to short sell a few companies who were estimated to go bankrupt by the end of the year including companies such as GameStop, AMC and Nokia. A series of redditors on the subreddit entitled “r/WallStreetBets” had advised regular retail holders (normal people who invest in stock through apps such as Robinhood or Cash App), to buy shares of these companies Wall Street has been betting on going bankrupt, thus, skyrocketing the price of the shares, specifically starting with company GameStop ($GME). $GME, a stock Wall Street has profited off by betting on its bankruptcy, displayed share prices in early January that stopped at $17 a share. A share of $GME was $347 as of last Wednesday. With the average person and a collaboration of redditors forcing a phenomenon on the capitalists of Wall Street referred to as “short squeezing,” the apps that support the investments in these companies for the common people have suspiciously stopped working.
Robinhood, one of the biggest platforms for retail stock trading, faced a suspicious technical difficulty amongst stock prices of GameStop rising, further preventing investors to buy shares of companies such as GameStop, Nokia and AMC since last Thursday when prices were beginning to soar. This has sparked lawsuits against Robinhood by retail shareholders, claiming these actions prevented users of potential profits they could have made by investing in these stocks. Besides uniting people all over the country to overturn hedge fund holders, it is possibly introducing some bipartisanship to tackle the suspicions introduced around investing apps.
Congresswoman Alexandria Ocasio-Cortez (AOC) has commented on the suspicions surrounding platforms such as Robinhood from blocking investors from getting in on overthrowing Wall Street. AOC issued a tweet last Thursday describing the situation as “unacceptable,” and implied that she would be open to an investigation of Robinhood’s “decision to block retail investors from purchasing stock while hedge funds are freely able to trade the stock as they see fit.” Although this reaction may be viewed as typical from AOC considering her progressive politics, what was not anticipated was Senator Ted Cruz’s support of AOC’s tweet, replying “fully agree.” Her colleague’s reply did not sit well with her, considering Senator Cruz’s involvement in recent events which AOC claims has posed a threat to her life. AOC responded to Senator Cruz’s reply by saying, “I am happy to work with Republicans on this issue where there’s common ground, but you almost had me murdered 3 weeks ago so you can sit this one out. Happy to work w/ almost any other GOP that aren’t trying to get me killed. In the meantime if you want to help, you can resign’.’
Other politicians have commented on the situation including Bernie Sanders and Elizabeth Warren. Sanders, who has famously had a complicated relationship with the “billionaires on Wall Street,” issued a tweet last Friday regarding hedge fund owners such as Leon Letterman’s complaints about the situation. Sanders said, “Oh look, another billionaire is mad that he might have to pay more taxes while children in America go hungry and veterans sleep on the street. Cry me a river”. Sanders has highlighted the need to ensure that capitalists on Wall Street pay their fair share in taxes throughout his campaigns, but especially during this historic economic event. Warren has also pushed this agenda, questioning as to why the Robinhood app had stopped retail holders from trading stocks such as GameStop, AMC and others in a pivotal moment. Like Sanders, Warren has run her political campaigns highlighting how this is not random on Wall Street, but a result of long periods of corruption. Warren is quoted as saying, “Understand: What’s happening with GameStop is just a reminder of what’s been going on on Wall Street now for years, and years and years. It’s a rigged game… we need a market that is transparent, that is level and open to individual investors. It’s time for the SEC to get off their duffs and do their jobs.”
The billionaires of Wall Street, however, have commented on the situation, suggesting that stocks will drop, and, according to Fox Business commentator Stuart Varney, “end in tears.” The real “Wolf of Wall Street” himself, Jordan Belfort, has put his own two cents into the situation. Belfort, in an interview with CNN, insinuated that the redditors colluded to create an economic phenomenon with repercussions, furthermore defending platforms such as Robinhood from protecting their best interests legally rather than siding with the billionaire hedge fund holders against retail stockholders. Belfort echoes the cries of other billionaires, stating “when this is over, and it will end, and all these stocks come crashing back down to their fundamental values, there are going to be lawsuits flying aimed at Robinhood, Ameritrade, all the platforms that did the trades…”. In response to a post sent out by r/WallStreetBets which essentially stated they did not have the resources to bail themselves out of bankruptcy if all goes wrong, unlike the hedge funds of Wall Street, Belfort stated “I love you guys, but it is laughable because what you will do it to hire a class action attorney and sue everybody on your behalf.”
With an economic battle occurring between retail stockholders and billion dollar hedge fund holders, politicians and economic commentators are taking sides. What side certain public figures fall on may go on to shape the future of the stock market in America and the way Wall Street is operated well into the future.