Wall Street

SEC chief worries about retail investors’ push to get rich quick

Summary

Investor Chamath Palihapitiya: The GameStop story is pushback against Wall Street establishment Description video: CNBC’s \”Halftime Report\” team is joined by Chamath Palihapitiya, CEO of Social Capital, to discuss how he traded GameStop and what he thinks this means for […]

Investor Chamath Palihapitiya: The GameStop story is pushback against Wall Street establishment

Description video:
CNBC’s \”Halftime Report\” team is joined by Chamath Palihapitiya, CEO of Social Capital, to discuss how he traded GameStop and what he thinks this means for the investment landscape going forward. To see the full interview with Palihapitiya sign up for a free trial to CNBC Pro: http://cnb.cx/3qXOJB4

SEC chief worries about retail investors’ push to get rich quick

The head of the US Securities and Exchange Commission on Thursday said he was concerned about the risks for retail investors, who increasingly place short-term bets through low-cost trading platforms rather than sticking to long-term investments..

«We are seeing a significant inflow of funds from retail investors who trade more than they invest», – said Jay Clayton Thursday in an interview with CNBC «Squawk Box».

The growth of new low-cost and easy-to-use trading apps combined with ultra-low interest rates have led to an influx of money in stocks from small investors looking to capitalize on the market rally. This money often spilled over into highly risky deals, including shares in companies that filed for bankruptcy..

SEC chief worries about getting rich quick for retail investors

Robinhood Markets Inc came under heavy criticism in June when a 20-year-old client committed suicide after believing he had suffered massive losses using the company’s free trading app. Since then, Robinhood has expanded its educational content for options trading.

«I encourage people to educate themselves, but short-term trading is more risky than long-term investments and I am really worried about this risk that investors take on.», – Clayton told CNBC.

He also defended the agency’s recent proposal to significantly raise the reporting threshold for representatives of large institutional investment managers after critics said it would reduce market transparency..

Last month, the SEC proposed an amendment to Form 13F, the quarterly report of hedge funds on their investment performance and volume fixed assets. This measure will cover the activities of hedge funds with assets of $ 3.5 billion, up from the current $ 100 million threshold that was set. four decades ago.

«The purpose of this form is for regulators to manage large market positions and the current threshold is clearly not the correct number.», – said Clayton.