Elizabeth Warren told the SEC to 'grow a backbone' and regulate hedge funds in the wake of the GameStop-Wall Street saga

• Sen. Elizabeth Warren said the GameStop saga showed why hedge funds needed heavier regulation.
• "It's a rigged game," the longtime critic of Wall Street told CNN on Sunday.
• She said the SEC should introduce regulation meant to empower individual investors.

In the wake of the GameStop trading frenzy, Sen. Elizabeth Warren says the US Securities and Exchange Commission needs to introduce more regulation to keep hedge funds from playing markets to their advantage.

And it should "grow a backbone" to enforce those rules, she told CNN's "State of the Union" on Sunday.

"We've got a real problem on Wall Street, and it's time to fix it," she added.

Day traders have banded together on Reddit to bump up the prices of several stocks, most notably GameStop but also AMC and Nokia, after noticing that hedge funds were betting against them. GameStop stock has gained massively in recent weeks - from below $5 late last year to a peak of more than $450 a share on Thursday.

Warren wrote to the SEC on Friday urging it to investigate the saga and asking how it would prevent similar incidents. Senate Majority Leader Chuck Schumer is similarly pushing the SEC to launch an investigation "ASAP."

In a statement Wednesday, Warren also slammed hedge funds and investors, saying they had treated the stock market "like their own personal casino." She echoed this on CNN on Sunday, saying the system favored large players rather than individual investors, but noted that "we actually don't know who all the players are in all this" or "whether there's big money on both sides."

She added that the SEC should clamp down on market manipulation and certain questionable trading practices.

Read more: How hedge funds are tracking Reddit posts to protect their portfolios after the Wall Street Bets crowd helped tank Melvin Capital's short positions

She urged the SEC to reverse regulations introduced under President Ronald Reagan that allow companies to buy back their own stock and inflate prices.

"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," she told CNN. "It's a rigged game."

Some brokerages, including Robinhood, Charles Schwab, and TD Ameritrade, responded to the recent activity by restricting purchases in highly volatile stocks. Alongside the hedge funds themselves, these brokerages have come under fire for their decisions, with both politicians and Reddit users saying such moves deliberately disadvantage individual investors.

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

Other politicians and influential figures have also spoken out against Wall Street over the past week.

The Robinhood app was bombarded with negative reviews on the Google Play store and has also come under fire from the likes of Democratic Rep. Alexandria Ocasio-Cortez, Republican Sen. Ted Cruz, and Tesla CEO Elon Musk.