WASHINGTON, D.C.—Benjamin Schiffrin, Director of Securities Policy for Better Markets, issued the following statement in connection with Better Markets’ new Fact Sheet entitled “Five Years After GameStop, Crypto, Prediction Markets, and 24/7 Trading Make Meme Stocks the Least of Retail Investors’ Troubles”:

“Five years after GameStop, regulators clearly failed to learn its central lesson. What was widely viewed as a one-off episode of meme-stock mania was in fact an early warning sign about the dangers of gamified trading and social media-driven speculation.

“In October 2021, the SEC released a report on the GameStop saga, attributing the frenzy to the rapid increase in trading by individual investors and questioning whether ‘game-like’ brokerage apps were encouraging investors to trade too much. Regulators effectively identified the problem, but they have failed to create any meaningful interventions. Five years later, they have done nothing to protect retail investors from the gamification of investing. Instead, regulators have allowed the dangerous gamification of investing to proliferate. The same risks that manifested in the GameStop trading frenzy have replicated and amplified themselves in crypto, prediction markets, and calls for 24/7 trading:

• Crypto blurs the line between prudent investing and pure speculation.
• Prediction markets operate as unregulated gambling sites.
• 24/7 trading aims to turn stock exchanges into around-the-clock casinos.

“The GameStop episode remains relevant today because gamified trading apps induced young and inexperienced investors to trade little-known stocks, with disastrous results. Today, gamification techniques encourage investors to put their money into everything from crypto to prediction markets, available on a 24/7 basis, with stock trading soon to follow. Five years after GameStop, despite participating in the stock market in record numbers, retail investors, due to regulators’ failure to protect them, are more vulnerable than ever.”

Read the fact sheet here.

###

Better Markets is a non-profit, non-partisan, and independent organization founded in the wake of the 2008 financial crisis to promote the public interest in the financial markets, support the financial reform of Wall Street and make our financial system work for all Americans again. Better Markets works with allies—including many in finance—to promote pro-market, pro-business and pro-growth policies that help build a stronger, safer financial system that protects and promotes Americans’ jobs, savings, retirements and more. To learn more, visit www.bettermarkets.org.