SEC Interim President Allison Herren Lee said the agency works 24 hours a day to eliminate any possible market manipulation.
Securities and Exchange Commission reviews social media posts for signs of possible fraud in frantic trading of GameStop and other companies, according to new report
The SEC’s review of online posts is in tandem with a review of trading data to assess whether such posts were part of a manipulative effort to raise stock prices, Bloomberg News reported on Wednesday, citing people familiar with the issue. .
The “meme stocks” rally fueled by the Reddit WallStreetBets forum inflated stock prices for a number of companies previously on the threshold, including GameStop, which rose 1,600 percent in January before wiping out 70 percent of its value in this week.
GameStop shares closed a modest 2.7% on Wednesday at $ 92.41, but are down nearly 80% from their peak of about $ 483 last week at the height of the frenzy.
GameStop shares closed a modest 2.7% on Wednesday at $ 92.41, but remain down nearly 80% from their peak, around $ 483 last week.
It was not immediately clear whether the target of the SEC investigation was the small investors who promoted GameStop in a fight against large hedge funds or whether the agency suspects larger investors of manipulating social media behind the scenes.
An SEC spokesman did not immediately respond to the request for comment.
WallStreetBets users mocked the SEC’s potential move to investigate them, sometimes in rude terms.
“For the SEC lawyer who reads this: I like to cover myself with lubricants and pretend I’m a language,” one wrote.
“Hello to all the new SEC interns. I bought another 11 shares yesterday / today. I just like the stock ok “, wrote another.
Experts say it is difficult to prove fraud against someone because they are talking about an action, unless the person lied in some way about the company.
WallStreetBets users mocked the SEC’s potential move to investigate them, sometimes in rude terms
“It’s not a crime to go to a website and say, ‘I think the stock is going to grow,'” Brad Bennett, former chief financial officer of the financial industry regulator, told Bloomberg.
“If people choose to follow you, none of this is a violation or a crime,” he added.
Earlier this week, SEC Chairman Allison Herren Lee said the agency was working “non-stop” to eliminate any potential market manipulation in market volatility.
Lee said in an interview with National Radio earlier this week that the current situation could be “a little more difficult” than the typical SEC work.
Reddit WallStreetBets users encouraged the purchase of GameStop, AMC and other shares, causing short-term increases in shares.
GameStop shares rallied nearly 400% last week and have since fallen about 80% from last week’s highs.
Lee will meet with Yellen (above) and the heads of the Federal Reserve and the Commodity Trading Commission, possibly as early as Thursday.
An employee talks to a customer at a GameStop store in New York on Saturday
US securities law prohibits the release of any false or misleading information aimed at manipulating investors in the purchase or sale of securities, and regulators have been expected to explore whether Reddit was used to do so.
Meanwhile, Lee will meet with Yellen and the heads of the Federal Reserve and the Commodity Trading Commission, possibly as early as Thursday, a Treasury official told Reuters.
Yellen asked to discuss recent volatility and whether trade was in line with fair and efficient markets.
It was unclear whether a meeting could lead to action, but experts expect to focus on the growing role played by non-banking firms, such as hedge funds in financial markets, as small traders prepare. for a confrontation.
“The final fight with the boss. It’s happening tomorrow with Yellen, the SEC and the Federal Reserve, “he read on a Reddit post on Wednesday. “Either they will try to stop the party, or they will look for money to pay us and not break everything at once.”