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The country’s top financial regulator says it is closely reviewing “the extreme price volatility “of certain stock prices in the past few days. It also assured the public that the authorities are ready to act if they determine that there is market manipulation.
The U.S. Securities and Exchange Commission made the announcement on Friday, in the wake of powered Reddit stock peaks that have rocked Wall Street in the past few days. While the SEC’s 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 experienced significant and unexpected spikes in market prices.
“… We will act to protect retail investors when the facts demonstrate abusive or manipulative commercial activity prohibited by federal securities laws. Market participants must be careful to avoid such activity,” says the SEC statement. “Likewise, issuers must ensure compliance with federal securities laws for any offers or sales of their own securities. The Commission will continue our work on behalf of investors and markets. In this regard, we hope to facilitate a robust public dialogue between participants market and investors about the structure and operation of our securities markets. “
GameStop made headlines this week after it started posting massive gains in the stock market, trading at $ 483 a share on Thursday. The increase was attributed to a group of Reddit users who started buying shares in heavily sold companies like GameStop and AMC, as well as Blackberry and Bed, Bath & Beyond. The recovery, which apparently was coordinated on WallStreetBets’ sub-Reddit, was a major blow to short sellers and investment firms that were known to take short positions. So much so, several Wall Street elites have called for more regulations to prevent similar occurrences.
The Robinhood trading platform was also accused of market manipulation this week after implementing trading restrictions on more than 50 stocks, including GameStop. The SEC apparently addressed this controversy in Friday’s statement: “The Commission will closely review actions taken by regulated entities that could harm investors or unduly inhibit their ability to trade certain securities.”
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