Even the Justice Department is looking at the GameStop Fiasco

As the dust begins to settle around GameStop’s stock meme phenomenon, the hedge fund investigations, trading platforms and the Reddit community that fueled it are just beginning. Many people have already lost a lot of money, but even more could be at stake if lawmakers and regulators find that real laws have been broken.

Yesterday, Wall Street Journal reported that the fraud section of the Justice Department and the US San Francisco prosecutor’s office were looking for both information “from brokers and social media companies that were hubs for the business frenzy.” In theory, all cases arising from these surveys would be criminal, which would be harder for regulators to prove, but they will also have heavier burdens for any potential harm.

But like Wall Street Journal reports, the Commission for the futures trading of goods and the Commission for securities also looks at what happened to GameStop. As civil regulators, it could end up fining some of the traders or companies involved. Securities regulators in Massachusetts were also involved with the Commonwealth Secretary office who called Reddit DeepFuckingValue trader, also known as the former insurance marketer Keith Gill to testify at a state hearing later in the month.

All these coas Congress prepares to hold its own hearings on how people like Gill and others in the WallStreetBets subreddit have managed to take advantage of large bets placed by hedge funds and commission-free trading applications, such as Robinhood, to pump GameStop stock from double January double figures to over $ 400 per share during the height of the meme stock bubble. Rep. Maxine Waters, Chair of the House Financial Services Committee, previously asked Gill also to attend the Chamber hearing on GameStop scheduled to take place on February 18.

Yesterday, New York Times reported that Reddit executive Steve Huffman will testify at the meeting. A representative of Citadel, one of the hedge funds in the trading center, is also expected to attend, in addition to a possible appearance of its founder and CEO, billionaire Kenneth C. Griffin. In addition to Citadel Melvin Capital, a hedge fund that bet on shortstop GameStop and other companies (and lost billions in the process), Citadel’s sister company, Citadel Securities, which it also founded, is one of the factors market decision makers responsible for executing a large part of the transactions that people make on platforms like Robinhood. Waters previously suggested calling a representative of Melvin and Robinhood co-founder and CEO Vlad Tenev to attend the meeting.

Robinhood was attacked by angry users and several members of Congress has stopped trading GameStop and other meme stocks on its platform, which he later said he did because he did not have enough money at hand to cover transactions made by users with highly volatile shares. The reduction in transactions was followed by a series of severe declines in the value of GameStop’s share price and was eventually followed by the relative collapse (currently about $ 50, which is both much higher than a year ago). year, and much smaller than its peak last month).

Due to the Citadel’s connection to both Robinhood and a hedge fund that shortens GameStop stocks and stopping Robinhood from trading GameStop, there are many questions about when events happened and who won and lost because of them. The GameStock disaster also highlighted bigger problems with absurd but seemingly completely legal ways in which people can try to make money on Wall Street. by placing wild bets and then forming a subculture around them on Reddit. We’ll see if Congress or anyone else manages to get to the bottom of what’s going on, let alone fix it.