Investors Look to U.S. as Watchdogs Overseas Tackle Market Manipulation

June 21, 2025

Updated on July 2, 2025

June 21, 2025 – As global financial markets face heightened scrutiny, U.S. retail investors are intensifying their efforts to combat market injustices, particularly naked short selling, echoing sentiments expressed by India’s Securities and Exchange Board of India (SEBI) Chairman Tuhin Kanta Pandey, who recently declared a zero-tolerance stance on market manipulation.

While SEBI’s crackdown signals a global push for market integrity, American retail investors are leveraging grassroots campaigns, social media, and advocacy groups to demand transparency and reform in the U.S. financial system.

In a recent address in Mumbai, SEBI Chairman Tuhin Kanta Pandey emphasized that market manipulation, including practices like pump-and-dump schemes and insider trading, will face stringent consequences.

“We will continue to watch.

On market manipulation, we will come down very hard going forward,” Pandey stated, highlighting SEBI’s focus on curbing fraudulent practices in India’s capital markets, particularly in small and medium enterprise (SME) initial public offerings (IPOs) and derivative trading.

SEBI’s recent raids on 15-20 shell companies involved in a ₹300 crore pump-and-dump scheme underscore this commitment, marking some of the largest enforcement actions in the regulator’s history.

Pandey’s remarks resonate globally as regulators grapple with evolving market challenges.

In the U.S., retail investors, emboldened by social media platforms like X, are drawing parallels to their own fight against manipulative practices, particularly naked short selling—a practice where shares are sold short without first borrowing them, potentially distorting market prices and harming investors.

U.S. Retail Investors Take a Stand

The U.S. retail investor movement, galvanized by high-profile cases involving stocks like GameStop ($GME), AMC Entertainment ($AMC), and Meta Materials ($MMTLP), has gained significant traction in recent years.

Posts on X highlight the growing frustration among retail investors, who argue that naked short selling undermines market fairness by artificially inflating share supply and driving down prices.

Advocacy groups like We The Investors and Retail United Advocacy Group have emerged as key players, urging executive action to address these issues.

On April 10, 2025, We The Investors called for an executive order to ban naked short selling, advocating for stricter penalties for failures-to-deliver (FTDs), where shares are not delivered after a short sale.

Over 10,000 inquiries, including 2,700 direct letters and 8,700 petition signatures, were sent to President Donald Trump, pressing for reforms to restore market integrity.

The movement gained further momentum with a June 12, 2025, letter from Retail United Advocacy Group to President Trump, urging action to protect shareholders of companies like $AMC, $GME, and $MMTLP from manipulative practices.

This followed a January 2025 rally in front of the U.S. Securities and Exchange Commission (SEC), where hundreds protested naked short selling and market manipulation.

Also Read: Ken Griffin Now Says Retail Investors Will Never Beat The Pros

Naked Short Selling: A Persistent Issue

Naked short selling remains a contentious issue in the U.S., despite regulatory efforts post-2008.

Critics argue that lax enforcement and loopholes allow market makers and hedge funds to exploit the practice, harming retail investors and smaller companies.

Unlike India, where SEBI has taken decisive action—such as barring former IIFL Securities director Sanjiv Bhasin and 11 others for front-running scams—the U.S. SEC has faced criticism for inconsistent enforcement.

SEBI’s recent order against Bhasin, who allegedly profited ₹11.37 crore by manipulating stock prices through media endorsements, highlights the kind of proactive measures U.S. investors are demanding from their regulators.

In the United States, bad actors use media to ‘short and distort’ stocks.

The parallels between SEBI’s actions and U.S. retail investor advocacy underscore a shared goal: fostering fair and transparent markets.

SEBI’s use of technology and data analytics to detect misconduct, such as insider trading and price manipulation, offers a potential model for the SEC.

Chairman Pandey noted that SEBI’s surveillance now incorporates social media monitoring and collaboration with law enforcement, a strategy that could enhance U.S. efforts to curb market abuses.

Meanwhile, U.S. investors are not waiting for regulatory action alone.

Retail investors are also pushing for greater transparency and market maker activities.

As SEBI clears the path for high-profile IPOs like that of the National Stock Exchange (NSE) and tightens its grip on market manipulators, U.S. retail investors remain steadfast in their pursuit of reform.

The movement, fueled by platforms like X and advocacy groups, shows no signs of slowing down.

The global fight against market manipulation is gaining momentum, with regulators like SEBI setting a strong example.

For U.S. retail investors, the battle is both a grassroots and policy-driven effort, with the potential to reshape the financial landscape for generations to come.

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