'Anarchy never works': Webull CEO Anthony Denier told us why the SEC should intervene as an army of Reddit traders takes over the market — and said membership exploded as people jumped ship from Robinhood

• In an exclusive interview, Webull CEO Anthony Denier said the SEC should “step in” amid volatility.
• Traders have been buying up shares of heavily shorted stocks like GameStop and AMC Entertainment.
• Denier said Webull’s membership skyrocketed as users jumped ship from Robinhood and elsewhere.
• Visit Business Insider’s homepage for more stories.

The Securities and Exchange Commission should “step in” and reestablish order in the market as an army of retail traders continues to drive volatility in the share prices of GameStop, AMC Entertainment, and others, Webull CEO Anthony Denier said.

In an interview with Insider on Thursday, Denier said the SEC should take action to regulate the breakneck price action in several heavily shorted stocks this week, saying, “these kinds of things usually end bad.”

“Just like anything else, order creates prosperity. This order and chaos is never good for anyone. It may be fun, but anarchy never works,” he said. 

He added: “One of the conceptions is that, ‘this is a free market, and if we think the stock should be $10,000, you can’t stop us,’ when that’s really not the case. The whole point of regulators is to maintain an orderly market, and if the market becomes disorganized and disconnected, they step in, whether it’s going down too hard or it’s up to hard.”    

He said he expected an announcement from the regulatory agency on Thursday.

“I’m pretty confident later today we’ll see some sort of announcement. What that announcement is, I can’t be certain, but they will be making some sort of decree. Whether it’s temporarily halting some stocks, we shall see,” he said.

The SEC said in a statement on Wednesday that they were “aware of and actively monitoring the on-going market volatility in the options and equities market.”

The meme-stock phenomenon

Retail traders have been drumming up demand for stocks that hedge funds like Melvin Capital recently held large short positions in. Short positions are bets that a share price will fall, yielding the trader a profit if it does. 

Shares of GameStop and AMC Entertainment climbed as much as 624% and 478%, respectively, since the market’s close on Friday, January 22. Both dropped significantly during intraday trading on Thursday after several brokerages including Robinhood and Webull restricted the buying of volatile stocks.

The meme-stock movement started in the r/WallStreetBets forum on Reddit and has gained wide traction, with influential billionaires Elon Musk and Chamath Palihapitiya drawing attention to, or partaking in, trading.

Celebrities outside the business and finance world have also gotten involved. Former adult film actress Mia Khalifa tweeted “BUY NOKIA !!!!!!!” on Wednesday. Musical artist Ja Rule urged traders, “DO NOT SELL!!! HOLD THE LINE,” in a tweet on Thursday.

Brokerages restrict buying

But trading flows seem to have hit roadblocks over the last two days.

Robinhood, a trading platform popular with Reddit users, on Thursday halted users from opening positions in GameStop and AMC Entertainment, sparking fury from traders and speculation about conspiracy theories. Webull followed suit with restrictions, saying in a tweet that its clearing firm could no longer support certain tickers because of the volatility. It then repealed the restrictions Thursday afternoon.

TD Ameritrade also disallowed trading of the volatile stocks.

Robinhood’s early curbs led many of its users to jump ship to other platforms, including to Webull. Denier said membership on Thursday morning grew by 1,548% above the average number of new users over the last seven days.

He spoke to Insider before his platform announced it was restricting some stocks, and said Webull went down for 10-15 minutes Thursday morning due to the extraordinarily high volume of users.

But Denier said he didn’t think other brokerages halted trading for nefarious reasons. Rather, he said that while he had not spoken to anyone at TD Ameritrade or Robinhood, he believed they acted to protect their platforms from crashing. 

“It is my impression that they turned off trading for those specific high-flying names to protect their own system,” he said. 

“You’re going to make a lot of Reddit warriors angry, thinking that it’s some bigger conspiracy theory, but at the end of the day they’re trying to protect the 15 million other customers they have that don’t even know what GameStop is.”

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