I’m sure we can all remember in January 2021 when many trading firms abruptly halted the purchase of popular meme stocks like AMC and GME. The scandal had retail investors in an absolute uproar and headlines hit mainstream media — as the “buy button” was conveniently removed by brokers and firms like TradeZero America, Citadel and Robinhood. Removing a “buy button” never feels right, but it feels even shadier when a company who removes it claims that they never did and deceives investors — which is exactly what TradeZero and Pipitone did.
Well it turns out justice has been served for TradeZero and co-founder Pipitone and as the popular saying goes, it’s “better late than never”. The SEC has finally released a press statement admitting that TradeZero did in fact lie to its customers. This often comes as a surprise, as retail investors are used to many instances of the SEC turning a blind eye to broker and hedge fund violations. However, in this case it’s been confirmed that TradeZero America mislead the public and customers via social media outlets and interviews. In one online statement Pipitone wrote,
“That some trading firms are blocking these symbols is disgusting, unprecedented.. our clearing firm tried to make us block you and we refused”.
It’s clear that Pipitone was trying to cover their tracks and deceive the public, as well as their very own customers. They tried to claim they did not remove the option to “buy” when they in fact did. The SEC paid attention to the violation and slapped TradeZero America with a $100,000 penalty and hit Pipitone with a $25,000 Penalty. Although it’s great to see that the SEC took the time to prosecute TradeZero, the fines don’t seem near enough. As always these fines are a small fee for companies to pay in the grand scheme of business. Harsher penalties for firms and hedge funds would likely create better business and trading practices overall — but instead these companies will continue to walk a thin line when it comes to their moral and ethical compass because the fines mean almost nothing to them. We’ve seen first had with Citadel, who as been fined 59 times for a variety of trading violations, but they still continue on, as if it’s simply the cost of doing business for them.