EXCLUSIVE-Treasury’s Yellen to convene meeting of key regulators on GameStop volatility

(Add details on market volatility, ethics note)

WASHINGTON, Feb.2 (Reuters) – United States Treasury Secretary Janet Yellen calls a meeting of leading financial regulators this week to discuss market volatility induced by GameStop Corp’s retail and other stocks .

Yellen will summon the heads of the Securities and Exchange Commission, the Federal Reserve, the Federal Reserve Bank of New York and the Commodity Futures Trading Commission, a Treasury official said on Tuesday.

Yellen sought and obtained permission from ethics lawyers before calling the meeting, according to a document viewed by Reuters, and engaging on high-profile issues in the financial services industry.

Yellen’s decision to seek the waiver follows a Reuters report that due to speaking fees she was paid by a key player in the GameStop saga, the hedge fund Citadel LLC, she may need to ask. an ethical derogation in order to deal with issues involving strengthening it.

The Treasury official, who declined to be identified by name, said the meeting would take place this week, possibly as early as Thursday.

“Secretary Yellen believes market integrity is important and called for a discussion of recent volatility in financial markets and whether recent activity is consistent with protecting investors and fair and efficient markets,” the door said. word of the Treasury, Alexandra LaManna, in a statement to Reuters.

Yellen’s action comes after days of fluctuations in the shares of video game retailer GameStop, driven by retail investors who have made or lost billions of dollars to hedge funds and other investors in recent weeks. Retail activity has also pushed up silver prices in recent days.

GameStop shares fell by more than half in value on Tuesday and silver prices retreated as the Reddit-induced trading frenzy that rocked the stock and commodity markets subsided, at least for the instant.

GameStop action closed 60% lower at $ 90. They are now worth less than a fifth of their high of $ 483 last week.

The saga is likely to accelerate a regulatory review of the growing role played by non-bank firms in financial markets, according to regulatory experts.

Treasury ethics lawyers have given Yellen the flexibility to work on any related issues that arise, with no limits on current or future markets, the Treasury official said.

In the memo granting Yellen permission to convene the meeting of regulators, Treasury ethics official Brian Sonfield said it would be “difficult, if not impossible” for Yellen to recuse himself from issues involving the volatility of the market. market.

“You are the Secretary of the Treasury, whose duties require you to be involved in a wide range of issues focused on these sectors,” Sonfield wrote.

“Problems related to these areas could arise at any time without the possibility of consultation with the ethics office. These circumstances make it difficult, if not impossible, for you to opt out of matters relating to these sectors and also to argue for prior authorization. “