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(Bloomberg) – The United States Securities and Exchange Commission has said it is “actively monitoring” volatility in options and equity markets amid soaring GameStop Corp. and other companies over the past week that prompted Democratic Senator Elizabeth Warren to seek action from regulators.
“In line with our mission to protect investors and maintain fair, orderly and efficient markets, we are working with our fellow regulators to assess the situation and review the activities of regulated entities, financial intermediaries and other market participants,” said the SEC said in a statement Wednesday.
Retail investors have been pushing GameStop stocks up quickly in recent days, squeezing hedge funds with large short positions in the company, in a twist that has caught the attention of Wall Street and Washington.
Shares of the video game retailer more than doubled on Wednesday, triggering at least two stops in volatility as it at one point had its largest intraday lead. GameStop grew eightfold in the past week, adding nearly $ 20 billion to its market value.
These measures have led Warren to pressure financial regulators to crack down on Wall Street, citing the frenetic activity.
In a clearly worded statement earlier Wednesday, the Massachusetts Democrat and longtime business nemesis expressed astonishment at the rally while criticizing hedge funds and others with short positions in the company.
“Personal casino”
“For years, the same hedge funds, private equity firms and high net worth investors appalled by GameStop transactions have treated the stock market like their own personal casino when everyone is paying the price,” Warren said. “It’s high time the SEC and other financial regulators woke up and do their jobs – and with a new administration and Democrats running Congress, I intend to make sure they do.
Warren’s comments came after White House Press Secretary Jen Psaki said Treasury Secretary Janet Yellen and Biden’s economics team were monitoring stock market activity around GameStop and other companies heavily. short-circuited.
“Our team is of course – our economic team including Secretary Yellen and others – monitoring the situation,” Psaki told reporters at the White House on Wednesday. She called the video game retailer’s business a “good reminder, however, that the stock market is not the only measure of the health of our economy.”
A spokesperson for the Treasury Department declined to comment. Federal Reserve Chairman Jerome Powell has also declined to weigh in on activity around GameStop.
“I don’t want to comment on any particular company, day-to-day market activity or things like that. It’s just not something I would generally comment on, ”he told reporters at a press conference Wednesday afternoon.
Read More: GameStop Rally Reaches New Extremes As Short Sellers Go
GameStop’s meteoric rise has captivated Wall Street, as an army of small traders spurred on by Reddit posts pushed the company’s stock price to unheard-of levels. The company’s shares started the year at just $ 19. Hedge funds that held short positions on GameStop, like Melvin Capital, shut down as the rally continued, suffering billions of dollars in losses.
New York Democrat Representative Alexandria Ocasio-Cortez said in a tweet that Wall Street and those who post online have taken a similar approach to the economy and the markets.
“I have to admit it’s really something to see Wall Streeters with a long history of treating our economy like a casino complaining about a poster board also treating the market like a casino,” he said. she writes.
While some commentators have called the frenzy a populist uprising against Wall Street institutions, others see a dangerous game that could potentially expose investors to significant losses. Some have questioned whether this was the result of deliberate market manipulation.
Earlier: Michael Burry calls GameStop Rally ‘unnatural, crazy’
Investor Michael Burry, who previously defended GameStop in 2019, called the current phenomenon “unnatural, insane and dangerous”.
“What’s happening now – there should be legal and regulatory implications,” tweeted Burry, who rose to prominence for his bet against mortgage-backed securities before the 2008 financial crisis.
Burry’s tweet tagged the SEC’s Law Enforcement Division.
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