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The country’s main financial regulator says it is looking closely at “the extreme price volatility “of some stock prices in recent days. It has also reassured the public that officials are ready to act if they determine that market manipulation was at play.
The United States Securities and Exchange Commission made the announcement on Friday, following the Reddit-fueled crisis the stock spikes that rocked Wall Street in recent days. While the SEC statement did not mention any specific companies involved in the saga, it is clear that the agency was referring to the frenzy surrounding GameStop and AMC, which saw significant and unexpected spikes in market prices.
“… We will act to protect retail investors when the facts demonstrate abusive or manipulative business activity that is prohibited by federal securities laws. Market participants must be careful to avoid such activity,” reads part the SEC statement. “Likewise, issuers must ensure compliance with federal securities laws with any proposed offer or sale of their own securities. The Commission will continue its work on behalf of investors and the markets. In this regard, we hope to facilitate a solid public dialogue between market participants and investors on the structure and functioning of our stock markets. “
GameStop made headlines this week after starting to post massive gains in the stock market, reaching $ 483 a share on Thursday. The flare was attributed to a group of Reddit users who have started buying shares of heavily sold companies like GameStop and AMC, as well as Blackberry and Bed, Bath & Beyond. The rally, which was apparently coordinated on the WallStreetBets sub-Reddit, was a blow to short sellers and investment firms known to take short positions. So much so that some Wall Street elites have called for increased regulation to avoid similar events.
The Robinhood trading platform was also accused of market manipulation this week after putting in place trading restrictions on more than 50 stocks, including GameStop. The SEC apparently addressed this controversy in Friday’s statement: “The Commission will closely examine actions taken by regulated entities that could disadvantage investors or unduly hamper their ability to trade certain securities.”
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