Wall Street regulators must do more to address market risks highlighted by the "meme-stock" trading frenzy of January 2021 that pitted individual GameStop Corp investors against powerful hedge funds, a congressional report said Friday, Reuters reported. Meme stock trading — where companies see their value fueled more by social media attention than fundamentals continues — with cosmetics maker Revlon Inc. the latest example. The report by the U.S. House of Representatives' Financial Services Committee singled out Robinhood's trading app for "troubling business practices" and urged regulators to step up scrutiny of retail brokers. Robinhood said there was "nothing new" in the report, that it took "the appropriate and responsible steps necessary to protect and support our customers" and has made significant improvements since then. The report, which raises pressure on regulators to do more, also called for new brokerage liquidity rules and for regulators to hasten a crackdown on the "gameification" of trading — game-like features that prompt users to trade more. "The meme stock saga has raised questions about how retail trading market infrastructure currently operates and whether it is appropriately designed and regulated," the report said. The report, which was prepared following hearings in February 2021, analyzed how quickly money was made and lost when GameStop shares surged more than 1,600% in January last year before collapsing.
