> If true, it seems to call into question the regulatory policy of letting non-qualified investors trade in these things in the first place.
That's a disturbingly paternalistic thought to my reckoning, and it's the "Baptists" part of the bootleggers and Baptists story that leads to barriers to entry that end up benefiting large, concentrated interests (who can afford all the crazy paperwork and legal fees) over smaller players. Maybe there's a problem, but, "impose a licensing scheme to prevent people from taking risks with their own money" should probably be the last thing you try, not the first.
People are rightly warned not to trade in OTC stocks if they don't know what they are doing, but I bet most people understand that warning to be about the companies likely being dodgy rather than about the market itself being rigged.
If the market mechanics mean it's essentially house-always-wins, you bet I'm paternalistic enough to advocate regulation against offering these casino chips to retail investors.
Why make a distinction between retail and individual investors? Either it's rigged, in which case it's almost certainly fraud, or it's not rigged and that means it's not exactly "house-always-wins". Like I said, making it so only certain people can participate in the market seems like the last step, not the first.
That's a disturbingly paternalistic thought to my reckoning, and it's the "Baptists" part of the bootleggers and Baptists story that leads to barriers to entry that end up benefiting large, concentrated interests (who can afford all the crazy paperwork and legal fees) over smaller players. Maybe there's a problem, but, "impose a licensing scheme to prevent people from taking risks with their own money" should probably be the last thing you try, not the first.