Regulators and federal prosecutors are probing potential misconduct in the GameStop trading frenzy, as the Securities and Exchange Commission moves to restore harsher penalties on wrongdoers, the Washington Post reported. Attorneys in the Justice Department’s criminal division are conducting a wide-ranging investigation into possible market manipulation from the trading surrounding GameStop, and recently issued a subpoena to Robinhood as part of that, a person familiar with the matter said. The probe, though, appears to be in its early stages. SEC acting chair Allison Herren Lee in a radio interview earlier this month said the agency already is investigating the matter “from a number of different angles, and they’re very significant.” Specifically, she indicated the agency is looking into whether brokers such as Robinhood complied with regulations when they limited trading in certain so-called “meme stocks.” And she said the agency is looking for signs of market manipulation amid the trading mania. Beyond the GameStop probe, Lee said Thursday that the agency is reversing a policy that shielded financial firms settling charges from further punishment. Under the Trump-era approach, the SEC bundled settlement agreements with waivers that allowed the targeted companies to continue raising money in public markets. Lee in a statement said the new policy marks a “return to the division’s long-standing practice” and ensures “that the consideration of waivers is forward looking and focused on protecting investors, the market, and market participants from those who fail to comply with the law.”
