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The attorneys general of Texas and New York have moved to investigate trading in GameStop shares, prompting one legal expert to predict further actions nationwide.
"Not surprisingly, state regulators have begun initiating investigations of all of the trading and any brokerage failures surrounding the Reddit insurrection, including New York and Texas, which unlike the [Securities and Exchange Commission and the Financial Industry Regulatory Authority], can utilize criminal investigative and prosecutorial authority," said John Reed Stark, president of John Reed Stark Consulting in a recent LinkedIn post.
"Expect other states to follow New York and Texas' lead," added Stark, the former chief of the SEC's Office of Internet Enforcement.
As to the SEC, Stark notes that "no doubt the SEC has initiated a dual track assault upon Robinhood: an investigation conducted by the SEC Enforcement Division and a 'for cause' examination conducted by the SEC Examinations Division."
In fact, Stark continued, "the SEC has probably already dispatched an examination team to Robinhood and, as a registered entity, Robinhood must answer all questions and documentary demands. Delaying or refusing to respond will place Robinhood's SEC registration at risk."
