SEC, not Congress, should step in amid GameStop stock frenzy: Analyst

"I would prefer the SEC [Securities and Exchanges Commission) do the regulation as opposed to Congress, because they're the expert in this. The whole point of the SEC is they're expert regulators," Cipperman said.

GameStop shares hit $160 at the open before being halted after several minutes of trading and fell to around $129 before the second halt. The stock resumed trading around 10 a.m. Eastern and hovered around $143 in late morning trade, up 56%.

The rally lifted other "stonks" popular on sites such as Reddit's WallStreetBets, with AMC Entertainment Holdings Inc up 12.5% and headphone company Koss Corp up nearly 61%.

Video Transcript

- Well, there's clearly a herd mentality going on where people on social media are saying good things about the stock and rushing in and seeing the increase and there's momentum. And retail investors are fueling that momentum. So there's a bit of a rush into GameStop, a bit of a crowd frenzy going on. Which I think is, to a large extent, driving the stock price up. I think a couple of weeks ago a lot of the stock price increase was that same group of people online, on Reddit and some other sites, and added to that was the short sellers having to cover positions which was sort of jet fueling the increase in the GameStop price. But I think, at this point, it's become a more of a social media phenomenon.

I'm not as concerned about what's going on on social media or on Reddit. I think, to some extent, that's a symptom of a broader issue. I think if there's an issue that needs to regulated it's the payment for order flow system that has given rise to this sort of no commission trading that is in the marketplace. And, obviously, Robinhood, it was discussed in the press, but there's, obviously, other no commission firms as well that are funded with sort of the payment for order flow mechanism. It's an inherent conflict of interest. There's been a lot of issues with it and I think it's allowing this sort of gamification, if you will, of certain stocks on these websites.

I would prefer the SEC do the regulation as opposed to Congress because they're expert in this. You know, they are-- the whole point of the SEC is they're expert regulators. They know the markets and they're in a better position to sort of analyze what happened and cut with a scalpel as opposed to with a chainsaw. So I'm hoping the SEC steps in and I'm hoping that'll be soon.