Washington’s top stock market police show no desire to crack down on the behavior of millions of retail investors who use forums on Reddit and other social media platforms to coordinate investment strategies, sometimes at the expense of short sellers based on Wall Street. .
During an interview on Wednesday, CNBC’s Jim Cramer asked Gary Gensler, chairman of the U.S. Securities and Exchange Commission, whether the SEC should intervene to prevent a coordinated effort by Reddit investors to “destroy” short sellers. who were betting on popular meme stocks like GameStop Corp. GME,
and AMC Entertainment Holdings Inc. AMC,
“If three members of hedge funds work in concert to destroy a short hedge fund, the 5 million people on Reddit would say it’s illegal, but maybe it shouldn’t be,” Cramer said. “If five million people decide to destroy a hedge fund that is short, right? What’s within the limit of what you can do to destroy a short seller? “
GameStop became a popular investment on social media, in part because retail investors saw the company being unfairly attacked by short sellers who lowered the stock price and risked turning the company’s failure into a self-fulfilling prophecy.
Gensler declined to comment specifically on the GameStop situation, but defended the right of people to speak freely about investment opportunities and to convince their investors to copy their trading strategies.
“People come into your program and claim to buy or sell a stock,” Gensler said. “Before we had television, people did it on the radio, now we have several social networking platforms.
Not only is this freedom of speech, but it is part of what makes our capital markets robust, so that people can disagree and disagree with the media of the day. But I also think we watch the markets for fraud, manipulation, pumping schemes and the like. “