I am getting the impression that people think the stock markets are closely regulated and wrongdoers are often punished

Yeah see that's not what happens. The Securities and Exchange Commission (SEC) which polices the markets, has suffered budget cuts in every Republican administration. It cannot even keep up with whistleblowers. https://www.insurancejournal.com/news/national/2019/10/14/545336.htm

Nothing looks illegal from the existing securities laws in the GameStop thing as of now. We do need more info on what is happening behind the scenes, because misinformation and pump-n-dump is illegal and if that's happening, yes regulators will pay attention.

But generally? Public stock tips, hyping stocks, short squeezes, "talking your book" (bragging about your investment so others will join you) are all just how markets work and have long worked.

Do markets need to be better regulated? Yes. Will that happen in our lifetimes? Looking at the trend lines of deregulation over the past 40 years: Probably not.

Here's a reminder of something that happened a few years back called "the London Whale." A J.P. Morgan trader made some wild bets using the bank's billions of dollars, and hedge funds piled in to create a short squeeze on that guy. https://financialpost.com/investing/jpmorgans-london-whale-problem-lures-hedge-fund-sharks

I wrote this explainer of the London Whale situation 9 years ago. ( @Marketplace it would be great if you could restore bylines). The whole incident was huge. Hedge funds piled in to teach J.P. Morgan a lesson. But ultimately, minimal punishment.

https://www.marketplace.org/2012/05/11/jp-morgans-loss-explainer/

It's the law of the jungle out there, folks. The SEC expects you to do your research. If anyone is buying GameStop for the lulz, please know that while it is perfectly legal, it is also going to hurt when the big hedge funds leave and the stock falls again.

I wrote this back in 2010 for Slate (The Big Money) about how the SEC doesn't even protect *rich* investors. It's not going to protect you either. It just doesn't have the resources. https://www.cnbc.com/id/36825437