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The country’s leading financial regulator says it is investigating ‘the extreme price volatility “of certain stock prices over the past few days. It also reassured the public that officials are willing to take action if they believe the market manipulation was there.
The U.S. Security and Exchange Commission made the announcement Friday following the Reddit-powered stock increases that have plagued Wall Street over the past few days. Although no specific ventures were mentioned in the saga in the SEC statement, it is clear that the agency is referring to the madness surrounding GameStop and AMC, which is experiencing significant, unexpected increases in market prices.
“… We will act to protect retail investors when facts show offensive or manipulative trading activities prohibited by federal security laws. Market participants must be careful to avoid such activities,” the SEC statement said in part. “Similarly, issuers must ensure that federal security laws are complied with for intended offerings or sales of their own securities. The Commission will continue our work on behalf of investors and the markets. In this regard, we hope for a strong public dialogue between market participants and investors on the structure and operation of our security markets. ‘
GameStop made headlines this week after it started posting a huge rise in the stock market and traded at $ 483 a share on Thursday. The boom is attributed to a group Reddit users who started buying shares of heavily short-circuiting companies like GameStop and AMC, as well as Blackberry and Bed, Bath & Beyond. The rally, apparently coordinated on the WallStreetBets sub-Reddit, was a major blow to short sellers and investment firms known for taking short positions. So much so, a number of Wall Street elites have called for increased regulations to prevent similar events.
The trading platform Robinhood is also accused of market manipulation this week after it applied trading restrictions on more than 50 stocks, including GameStop. The SEC apparently addressed this controversy in Friday’s statement: “The Commission will adversely review actions taken by regulated entities that could harm investors or otherwise unduly impede their ability to trade certain securities.”
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