GameStop’s roller coaster ride on the stock market has led to government investigations.
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GameStop share price shot through the roof in late January thanks to merchants on Reddit. Now, at least two government agencies are reportedly investigating why this happened, as well as what Reddit and Robinhood trading app thrown into the stock market madness.
The Justice Department’s fraud section and the San Francisco attorney general’s office are seeking information about the commercial frenzy of social media companies and commerce platforms, according to a report published Thursday by The Wall Street Journal . Prosecutors allegedly served information from Robinhood, where many of the deals took place. According to the Journal, Reddit is under investigation by the Commodity Futures Trading Commission (CFTC), as well as for its part in possible misconduct with traders from the subreddit r / WallStreetBets who spurred the wave of GameStop purchases along with other “meme” actions. .
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The Justice Department declined to comment. Reddit, Robinhood and the CFTC did not immediately respond to a request for comment.
GameStop shares started in January at just over $ 17 each and then peaked at $ 483 each on January 28. The subreddit traders r / WallStreetBets bought shares in droves to start a short squeeze on the hedge funds that were betting on the shares would fall. Robinhood and other brokers restricted trading of GameStop shares on January 28, after regulators demanded that companies provide a substantial amount of capital to cover trades, which did not exist on that day. Since then, the stock has fallen and continues to fall to $ 51.10 at the close of trade on Thursday.
Congress is already planning a hearing on February 18 about the events. Congresswoman Maxine Waters, a California Democrat, said Cheddar on February 3, that his committee would hear from Reddit, GameStop, Robinhood and others involved.