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President Biden’s chief economic adviser has said the administration will look into legal issues surrounding the roller coaster ride GameStop had last week as small dollar traders clashed with well-heeled hedge fund managers, propelling its action at astronomical levels.
“I could tell you that the SEC is trying to fully understand what has happened here. And their goal is to protect retail investors and also the integrity of the market, ”said Brian Deese, the head of the National Economic Council. NBC News’ Meet the Press.
The Securities and Exchange Commission said last Friday it would take steps “to identify and prosecute potential wrongdoing.”
“The Commission will closely review actions taken by regulated entities that may disadvantage investors or unduly inhibit their ability to trade certain securities,” Acting SEC Chairman Allison Herren Lee said in a statement.
An army of daily investors, organized on Reddit forums like WallStreetBets, acted to prevent backers from making huge profits by betting via short selling that GameStop’s stock would drop.
They spent millions to buy the stock of the financially troubled brick and mortar store, forcing many leading investment firms to sell at a substantial loss or incur even greater losses.
At one point, GameStop stock hit an all-time high of $ 492 per share before dropping back to around $ 325 on Friday.
It was trading as low as $ 3.30 per share in 2019.
RobinHood, the popular stock trading app, drew widespread criticism when it temporarily halted trading on GameStop until it was withdrawn on Friday.
NBC News host Chuck Todd asked Deese if he thinks short selling should be illegal.
“We’re going to look at these questions and certainly fully understand this particular episode and the larger questions in it. Our immediate goal here is to take the steps we need to put a floor in this economic crisis, ”Deese said.
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