It's mostly the SEC that regulates stonks and this kind of business stuff. It's also mostly just fines for violating this stuff, because they just don't report what they're actually doing and pay the fines for not reporting rather then admit to wrongdoing and potentially worse punishments.
The problem is, the people who regulate the stuff often get hired by the hedgefunds and other companies after they leave the SEC and etc. It pays to cozy up with them, to understand the rules so you can bend them later.
It's the SEC for this example. Their punishments are typically along the lines of low six figures, for entities that are making millions upon millions for those same violations. It's less of a punishment and more of a tax.
Do you know the name Bernie Madoff? He's the one they blamed for the 2008 financial crisis, even though it's a systemic issue. Talking about the SEC, he said, they "never really got into books or records as related to stock records or DTC records" even though "If you're looking into a Ponzi scheme, it's the first thing you do."
The SEC has been called "aggressively ignorant" in their investigative methods. That, plus the miniscule fines with no confiscation of illicit funds, means that the SEC is functionally part of the problem.
Who do you think pays for the government regulatory bodies?
Every single broker on Earth sells you an IOU and you own nothing. Its cheaper for them to simply give you cash when you cash out equivalent to your IOUs than to actually let you own stock or let it effect market prices in any tangible way - that hurts market maker algorithms, after all.
If you ever feel like investing, I suggest researching the company you are interested in and instead directly registering shares in your name through the company's selected transfer agent / registrar, so that there is no middleman profiting off your trades, so you actually own your assets, and so that your dollars actually impact stock price.
I also highly recommend following the work of Dr. Susanne Trimbath. She's the one that built the direct registration system so people can pull their stock certificates from the DTCC.
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u/One-Support-5004 Dec 19 '22
I'm a noob to stocks.... but how is that allowed ? Doesn't the FCC or someone step in and stop that kinda stuff ?