After a tumultuous week that saw GameStop’s previously flagging stock rise to prices of over $400 per share, sources cited by Bloomberg claim the SEC is looking over social media and forum posts for evidence of market manipulation. The investigation will also look into other companies caught up in the surge, including AMC Entertainment Holdings, which was thrown a much-needed lifeline by the sudden increase in investor interest.
The tumultuous week for GameStop stock has been attributed mostly to retail traders from subreddit WallStreetBets, where GameStop stock was popularized as a “meme stock,” according to one of the subreddit’s moderators. Allegations by some in the industry, including notorious short-seller Carson Block, claim that the short squeezes may have been orchestrated by professional investors who either took advantage of the Reddit hype or helped to build it.
The SEC’s acting chair Allison Herren Lee said the agency was looking at “compliance with regulatory obligations, adequate and consistent risk disclosure, and determining if any fraudulent or manipulative behavior has occurred.” The GameStop situation was big enough to gain attention from the White House and high-level public figures, making investigations into the event a much higher priority.
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