Abstract
US financial market regulators have taken a renewed interest in retail trading and brokerdealer practices following the January 2021 ‘meme stock’ extreme market volatility. In this paper, the authors examine broker-dealer practices and trading rules that are the subject of pending litigation. Specifically, this paper examines areas of potential regulatory interest in the aftermath of the trading frenzy, including payment for order flow and related customer disclosures. It also examines the rationale for certain trading restrictions implemented by some broker-dealers during the period of extreme volatility. It then analyses legal defences for broker-dealers in pending investor litigation. Lastly, this paper discusses potential criminal and regulatory liability for amateur traders active on social media and online forums.
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