SEC Now Responds to Retail Investors on Illegal Manipulation

In a significant development for retail investors, the U.S. Securities and Exchange Commission (SEC) has responded to a formal complaint from the Retail United Advocacy Group regarding alleged market manipulation, naked short selling, failures to deliver (FTDs), and broker-dealer misconduct affecting FingerMotion, Inc. (NASDAQ: FNGR) and retail investors as an entirety.

This response marks a pivotal moment in the ongoing dialogue between retail investors and regulatory bodies, signaling a potential shift toward greater accountability and transparency in addressing concerns about market integrity.

Below, are the details of the complaint, the SEC’s response, and the broader implications for retail investors advocating for fair markets.

The Complaint: Retail Investors Demand Action

On May 1, 2025, the Retail United Advocacy Group, representing concerned FingerMotion shareholders, sent a detailed letter to key U.S. authorities, including Attorney General Pam Bondi, FBI Director Kash Patel, and SEC Chairman Paul Atkins.

The letter outlined serious allegations of market misconduct impacting FingerMotion, a publicly traded company listed on NASDAQ.

The group’s concerns centered on four primary issues:

1. Naked Short Selling: The group stated that certain market participants were engaging in naked short selling, a practice where shares are sold without borrowing or delivering the underlying securities. This can create artificial selling pressure, depress stock prices, and dilute shareholder value.
2. Failures to Deliver (FTDs): Persistent FTDs in FingerMotion stock were highlighted as potential violations of SEC Regulation SHO, particularly Rule 204, which mandates that broker-dealers close out FTD positions promptly. FTDs occur when a seller fails to deliver shares to the buyer within the required settlement period, often linked to naked shorting.
3. Market Manipulation: The group pointed to suspicious trading patterns, such as spoofing (placing and canceling orders to manipulate prices) and high-frequency trading strategies, which may be artificially suppressing FingerMotion’s stock price to the detriment of retail investors.
4. Broker-Dealer Misconduct: Allegations were raised that some broker-dealers might be complicit in facilitating these activities, failing to adhere to regulatory requirements or prioritizing their interests over those of retail clients.

The Retail United Advocacy Group urged the SEC, FBI, and Department of Justice to investigate these practices, enforce existing regulations, and provide transparency to retail investors.

The letter emphasized the broader impact of such activities, noting that they not only harm FingerMotion shareholders but also erode public confidence in the fairness of U.S. financial markets.

The SEC’s Response: A Step Toward Engagement

On May 6, 2025, the SEC responded to the Retail United Advocacy Group’s complaint, with the response shared publicly via a post on X by @RetailUnitedFin.

The SEC’s Office of the Ombuds, tasked with handling retail investor recommendations, questions, and complaints, acknowledged receipt of the group’s submission.

The response, addressed to the Retail United Advocacy Group, stated:

“Thank you for contacting Chairman Atkins of the U.S. Securities and Exchange Commission (SEC).

Your submission was referred to the SEC Ombuds.

The Office of the Ombuds handles retail investor recommendations, questions and complaints about the SEC and the self-regulatory organizations (SROs) that it oversees.

The Ombuds generally treats matters as confidential and takes reasonable steps to maintain the confidentiality of communications.

However, our Office may need to contact other SEC divisions or offices, SROs, entities, and/or individuals to disclose information without permission under certain circumstances including, but not limited to: a threat of imminent risk or serious harm; assertions, complaints, or information relating to violations of the securities laws; allegations of government fraud, waste, or abuse; or if otherwise required by law.

Information received by the Ombuds may also be used in future recommendations to the SEC.

Thank you again for contacting the SEC Ombuds.

We appreciate your views.”

While the response does not confirm an immediate investigation or outline specific actions, it is a formal acknowledgment of the complaint and an indication that the SEC is engaging with retail investor concerns.

The mention of potential information sharing with other SEC divisions or self-regulatory organizations (SROs) suggests that the complaint may be escalated for further review, particularly if it involves allegations of securities law violations.

Also Read: Schwab Warning: Thousands Are Now at Risk of Margin Calls

A Step in the Right Direction

The SEC’s response represents a meaningful step toward bridging the gap between retail investors and regulatory authorities.

Historically, retail investors have often felt marginalized, with their concerns about market manipulation dismissed or overshadowed by the interests of institutional players.

The fact that the SEC’s Office of the Ombuds has acknowledged the Retail United Advocacy Group’s complaint demonstrates a willingness to listen and engage, even if the response is preliminary.

This development aligns with the SEC’s stated mission to protect investors, ensure fair and efficient markets, and facilitate capital formation.

Under Chairman Paul Atkins, who assumed the role in early 2025, the SEC has emphasized retail investor protection, building on initiatives like the Retail Strategy Task Force established in 2017 to address misconduct affecting retail investors.

The Ombuds’ role, created under the Dodd-Frank Act, further underscores the SEC’s commitment to serving as an advocate for retail investors by providing a direct channel for complaints and recommendations.

At least on paper, as it is action that will ultimately help restore and build trust with the agency.

The response also highlights the importance of collective action.

By retail investors organizing, FingerMotion shareholders have amplified their voice, making it harder for their concerns to be ignored.

This collective approach mirrors past retail investor movements, such as those surrounding the 2021 GameStop and AMC short squeeze, where coordinated efforts on platforms like Reddit’s WallStreetBets brought market manipulation issues to the forefront.

Also Read: Hedge Fund Now Freezes Ability For Customers To Withdraw Money

The Importance of Proactivity and Awareness

While the SEC’s response is encouraging, retail investors must remain proactive and continue raising awareness to ensure their concerns lead to tangible outcomes.

The fight against market manipulation is complex, requiring sustained effort and vigilance.

Here are key reasons why proactivity and awareness are critical:

1. Holding Regulators Accountable: The SEC’s response is a starting point, but it does not guarantee immediate action. Retail investors must continue to engage with the SEC, FBI, and other authorities, providing additional evidence and maintaining pressure for thorough investigations. Submitting tips, complaints, and referrals through the SEC’s online TCR system (https://www.sec.gov/tcr) can further support these efforts.
2. Amplifying the Issue: Public awareness is a powerful tool. By sharing their complaint and the SEC’s response on platforms like X, the Retail United Advocacy Group has brought attention to the issue of market manipulation affecting FingerMotion. Continued advocacy through social media, investor forums, and mainstream media can keep the spotlight on these practices, encouraging broader scrutiny and potential regulatory reform.
3. Educating Investors: Raising awareness also involves educating other retail investors about the risks of market manipulation, naked short selling, and FTDs. The SEC’s Office of Investor Education and Advocacy provides resources on investor.gov to help investors recognize red flags, such as pump-and-dump schemes or spoofing, and make informed decisions. Sharing these resources within investor communities can empower others to protect themselves and report suspicious activity.
4. Driving Systemic Change: The Retail United Advocacy Group’s complaint is part of a larger movement to address systemic issues in the financial markets. Past retail investor campaigns, such as those targeting naked shorting in “meme” stocks like AMC and GameStop, have led to increased regulatory scrutiny and policy discussions. By continuing to advocate, retail investors can push for stronger enforcement of regulations like Regulation SHO and the introduction of new rules to curb manipulative practices.

Also Read: Short Squeeze Alert: FingerMotion’s CTB Now Surges to Whopping 167%

Why This Matters

The SEC’s response to the Retail United Advocacy Group’s complaint about market manipulation affecting FingerMotion, Inc. is a promising sign of progress in the fight for fair markets.

By acknowledging the concerns of retail investors, the SEC is taking a step toward fulfilling its mission to protect investors and maintain market integrity.

However, this is just the beginning.

Retail investors must remain proactive, continue raising awareness, and hold regulators accountable to ensure that allegations of naked short selling, FTDs, and market manipulation are thoroughly investigated and addressed.

The Retail United Advocacy Group’s efforts serve as a model for how collective action and persistent advocacy can drive change, as seen with the MMTLP community.

As retail investors continue to organize and leverage platforms like X to amplify their voices, they have the potential to reshape the financial markets, making them more transparent, equitable, and trustworthy for all participants.

The road ahead may be challenging, but the SEC’s response is a reminder that retail investors are being heard—and their voices matter.

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