President Biden’s chief economic adviser said the administration was going to investigate the legal issues surrounding the roller coaster ride that GameStop took last week, while small-dollar traders were compared to well-established hedge fund managers, which caused stocks to rise astronomically.
‘I can tell you the SEC is set on fully understanding what happened here. And their focus is on protecting retail investors and also on the integrity of the market, ”said Brian Deese, head of the National Economic Council. NBC News’s “Meet the Press.”
The Securities and Exchange Commission said last Friday that it would take action to identify and pursue potential violations.
“The Commission will thoroughly review the actions taken by regulated entities that could harm investors or otherwise unnecessarily impair their ability to trade certain securities,” SEC Chairman Allison Herren Lee said in a statement.
An army of everyday investors, organized on Reddit forums like WallStreetBets, acted to discourage hedge funders from making huge profits by betting by short selling that GameStop’s share would fall.
They spent millions on buying the financially struggling brick-and-mortar stock, forcing many investment firms at the highest level to sell at a substantial loss or suffer even stronger losses.
At one point, GameStop stock reached a high of $ 492 per share before falling back to around $ 325 on Friday.
It traded as low as $ 3.30 a share in 2019.
RobinHood, the popular stock trading app, drew widespread criticism when it temporarily halted trading on GameStop until it supported Friday.
Nuck News host Chuck Todd asked Deese if he thought short selling should be illegal.
‘We’re going to look at these issues and certainly fully understand this particular episode and the broader questions there. We are immediately focusing here on the action we need to put a floor under this economic crisis, ”said Deese.