GameStop frenzy proves Wall Street a 'rigged game,' SEC regulators must 'do their jobs': Warren

Frenzy over GameStop shares that triggered a "short squeeze" and cost hedge funds big money is a reminder that Wall Street is a "rigged game," Sen. Elizabeth Warren, D-Mass., said on Sunday.

"Let's start with the fact we actually don't know who all the players are in this, whether there is big money on both sides. That’s why we need an SEC investigation," Warren told CNN's "State of the Union." "What's happening with GameStop is just a reminder of what's been going on on Wall Street now for years and years and years. It's a rigged game. ... They've turned this stock market, not into a place where you get capital formation to support businesses, but more into a casino."

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"We need a market that is transparent, level and that is open to individual investors," Warren continued. "It is time for the SEC to get off their duffs and do their jobs."

Robinhood was not spared from Warren's criticism after it placed restrictions on trading GameStop shares. Shares dropped sharply on Thursday, falling close to 40%, but surged in after-hours trading after Robinhood – facing a public outcry – said it would allow some trading on Friday.

Robinhood "can't be trying to help the hedge funds at the same time it pretends that it is trying to help individual investors," Warrren said. (Robinhood CEO Vlad Tenev has denied that pressure from hedge funds prompted the mobile brokerage firm’s decision to restrict trades involving GameStop shares.)

"It's not about protecting people from making bad trades. It's about keeping the playing field level," she said. "That's why we need regulations."

Warren said that hedge funds and corporations benefit from opaque, inefficient markets.

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"If we have a market that is transparent, level, that helps individual investors come into that market and, frankly, helps make that market more efficient," she said. "We talk about efficient markets. But the truth is, the hedge funds, many of the giant corporations, they love the fact that the markets are not efficient. They love being able to manipulate these markets because they get better returns, and individual investors lose out."

Brian Deese, President Biden's National Economic Council director, said the SEC was looking into the GameStop situation but said the Biden team's focus is on "American families across the country and small businesses on Main Street."

"The SEC is looking into all of the elements of this situation with a real focus on protecting retail investors and the integrity of the market. I think, bigger picture, what this reinforces is that the stock market is not a good barometer of what is happening in the economy for most American families," Deese told "State of the Union."

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"We're looking closely at this and we are going to look closely at the broader policy questions associated with the equity markets," he continued.

FOX Business' Thomas Barrabi and Megan Henney contributed to this report.