As the dust begins to settle around GameStops meme stock phenomenoninvestigations into the hedge funds, trading platforms and the Reddit community that fueled it are just underway. Many people have already lost a lot of money, but even more could be at stake if lawmakers and regulatory agencies discover that laws have been violated.
Yesterday, the Wall Street Journal report that the fraud department of the Department of Justice and the U.S. Attorney’s Office in San Francisco both requested information “from brokers and social media companies that were at the center of the commercial frenzy.” Theoretically, any cases arising from these sins would be criminal, which are more difficult for regulators to prove, but also carry heavier burdens for any possible offense.
But like the Wall Street Journal reports, the Commodity Futures Trading Commission and Securities and Exchange Commission also investigate what happened to GameStop. As civil regulators, they may eventually be fined by some of the traders or businesses involved. Security regulators are also reportedly involved in Massachusetts, with the office of the Secretary of State suing Reddit dealer DeepFuckingValue, or former insurance marketer Keith Gill. to testify later in the month during a state hearing.
All this fellowwhile Congress prepares to hold its own hearings on how people like Gill and others on the WallStreetBets subreddit managed to take advantage of big bets that hedge funds and commission-free trading programs like Robinhood placed around GameStop shares in the early lows double digits to pump. January to more than $ 400 per share during the peak of the bubble. Rep. Maxine Waters, chair of the House Financial Services Committee, Gill also attended the House trial on GameStop earlier. scheduled to take place February 18th.
G / O Media can get a commission
Yesterday, The New York Times report that Steve Huffman, CEO of Reddit, would also testify during the trial. A representative of Citadel, one of the hedge funds in the middle of the deal, is also expected to attend, in addition to a possible appearance by founder and CEO, billionaire Kenneth C. Griffin. In addition to Citadel Melvin Capital, a hedge fund that bets GameStop and other large card companies (and lost billions in the process), Citadel’s sister company Citadel Securities, which he also founded, is one of the market makers responsible for the execution. of a large a portion of the shares that people do on platforms like Robinhood. Waters has also previously suggested that a representative of Vladvin, co-founder and CEO of Melvin and Robinhood, be called to attend the trial as well.
Robinhood subsequently spoke out against angry users and a number of members of Congress stopped trading GameStop and other meme shares on its platformwhich was later said because it did not have enough money available to cover the trades that users do on the extremely volatile stocks. The increase in trading was followed by a number of serious declines in the value of the inflated share price of GameStop and is ultimately followed by its relative collapse (it is currently around $ 50, which is both much higher than a year ago and very lower than its peak last month).
Because of Citadel’s commitment to Robinhood and a hedge fund shorting GameStop shares and Robinhood’s strike from GameStop trading, there are many questions regarding the timing of the events and who earned and lost them. The GameStock stock debacle has also highlighted bigger problems surrounding the absurd but seemingly completely legal ways people can try to make money on Wall Street. by placing wild bets and then to form a subculture around them on Reddit. We will see if Congress or anyone else succeeds in correcting the essence of what is going on even less.