GameStop’s stock market roller coaster has led government investigations.
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GameStop’s share price shot through the roof in late January thanks to merchants on Reddit. Now at least two government agencies are investigating why this happened, as well as what roles Reddit and trading app Robinhood played in the stock market madness.
The Department of Justice’s fraud department and the U.S. Attorney’s Office in San Francisco are seeking information on the commercial rush of social media companies and trading platforms, according to a report Thursday from The Wall Street Journal. Prosecutors allegedly sued Robinhood, where many of the transactions took place. According to the Journal, Reddit is also being investigated by the Commodity Futures Trading Commission (CFTC) for its part in possible misconduct with traders at the subreddit r / WallStreetBets that spurred the purchase of GameStop along with other ‘meme’ shares.
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The justice department declined to comment. Reddit, Robinhood and the CFTC did not immediately respond to a request for comment.
Shares in GameStop started in January with just over $ 17 apiece and then peaked at $ 483 each on January 28th. sou val. Robinhood and other brokers restricted the trading of GameStop shares on January 28 after regulators required the companies to provide a significant amount of capital to cover trading, which they did not have on that day. Since then, the stock has fallen and continues to fall to $ 51.10 when trading closed on Thursday.
Congress is already planning a hearing on 18 February about the events. Rep. Maxine Waters, a Democrat from California, tells Cheddar on Feb. 3 that her committee would hear from Reddit, GameStop, Robinhood and others involved.