President Biden’s top economic adviser said the administration will examine legal issues related to the roller coaster that GameStop made last week as small-dollar traders faced hedge fund managers with good heels and they sent their actions to astronomical levels.
“I could tell you that the SEC is focused on fully understanding what happened here. And its focus is to protect retail investors and also the integrity of the market,” said Brian Deese, head of the National Economic Council. Meet the Press on NBC News
The Securities and Exchange Commission said last Friday that it will take steps “to identify and prosecute possible defaults.”
“The Commission will closely review the actions of regulated entities that may disadvantage investors or unduly inhibit their ability to trade certain securities,” SEC Acting President Allison Herren Lee said in a statement.
An army of everyday investors, organized on Reddit forums like WallStreetBets, acted to counter hedge funders from making huge profits by betting on short selling that GameStop shares would plummet.
Millions were spent buying shares of the brick-and-mortar store that had financial problems, forcing many top-tier investment firms to sell at substantial losses or suffer even stronger losses.
At one point, GameStop shares hit an all-time high of $ 492 per share before falling back to about $ 325 on Friday.
By 2019 it had been trading at $ 3.30 per share.
RobinHood, the popular stock trading app, sparked widespread criticism when it temporarily halted trading on GameStop until it withdrew on Friday.
NBC News host Chuck Todd asked Deese if he thought the short sale should be illegal.
“We will examine these issues and we will certainly fully understand this particular episode and the broader questions that exist. Our immediate focus here is to take the actions we need to put a word under this economic crisis, ”Deese said.