Acting SEC President Allison Herren Lee said the agency works “all day” to eliminate any possible market manipulation
According to a new report, the Securities and Exchange Commission is reviewing posts on social media for signs of possible fraud in the frantic trading of shares of GameStop and other companies.
The SEC’s review of online publications is being done along with a review of business data to assess whether those publications were part of a manipulative effort to raise stock prices, Bloomberg News reported Wednesday, citing familiar people with the subject.
The “meme stock” rally driven by Reddit forum WallStreetBets inflated stock prices for a number of previously hit companies, including GameStop, which shot up 1,600% in January before removing 70% of the stock. its worth this week.
Shares of GameStop closed a modest 2.7 percent on Wednesday at $ 92.41, but remain down nearly 80 percent from their high at around $ 483 last week, at its peak.
Shares of GameStop closed a modest 2.7 percent on Wednesday at $ 92.41, but remain down about 80 percent from last week’s high of about $ 483.
It was not immediately known whether the target of the SEC investigation was the small investors who have promoted GameStop in a battle against large hedge funds or whether the agency suspects that larger investors are manipulating social media behind the scenes.
An SEC spokesman did not immediately respond to the request for comment.
WallStreetBets forum users scoffed at the SEC’s possible action to investigate them, sometimes in gross terms.
“For the SEC lawyer who reads this: I like to cover myself with lubricant and pretend I’m a slug,” one wrote.
“Hello to all the new SEC inmates. I bought 11 more shares yesterday / today. I like the stock to be okay,” wrote another.
Experts say it’s hard to prove fraud against someone to talk about a stock unless the person has somehow lied about the company.
WallStreetBets forum users scoffed at the SEC’s possible action to investigate them, sometimes in gross terms.
“It’s no crime to go to a website and say,‘ I think stocks will increase, ’Brad Bennett, former chief financial officer of the Financial Industry Regulatory Authority, told Bloomberg.
“If people choose to follow you, it’s not an offense or a crime either,” he added.
Earlier in the week, SEC Acting President Allison Herren Lee said the agency is working “all day” to root out any possible market manipulation in market volatility.
Lee said in an interview with National Public Radio earlier this week that the current situation may be “a little more difficult” than typical SEC work.
Users of the Reddit WallStreetBets forum have been encouraging to buy GameStop, AMC and other stocks, causing short-term rises in stocks.
GameStop shares rose about 400 percent last week and have since fallen about 80 percent from last week’s highs.
Lee will meet with Yellen (above) and the heads of the Federal Reserve and the Commodity Futures Trading Commission, possibly as early as Thursday.
An employee talks Saturday with a customer at a GameStop store in New York City
U.S. securities law prohibits the disclosure of any false or misleading information intended to manipulate investors to buy or sell securities, and regulators are expected to explore whether Reddit was used to do so.
Meanwhile, Lee will meet with Yellen and the heads of the Federal Reserve and the Commodity Futures Trading Commission, possibly as early as Thursday, a Treasury official told Reuters.
Yellen has called for debate on recent volatility and whether trade has been consistent with fair and efficient markets.
It was unclear whether a meeting could lead to action, but experts hope it will also focus on the growing role non-bank companies play as hedge funds in financial markets, while small traders prepare for a showdown.
‘Fight the final boss. It’s happening tomorrow with Yellen, the SEC and the Federal Reserve, “he read on a Wednesday post on Reddit.” Either they’ll try to stop the party or they’ll be looking for money to pay us and not leave it all at once. “