President Biden’s chief economic adviser said the government will look into the legal issues surrounding GameStop’s roller coaster ride last week, while small-scale investors faced wealthy hedge fund managers, taking their stocks to astronomical levels.
“I could say that the SEC is focused on fully understanding what happened here. And their focus is to protect retail investors and also market integrity, ”said Brian Deese, head of the National Economic Council NBC News’ “Meet the Press”.
The Securities and Exchange Commission said last Friday that it will take steps “to identify and investigate possible violations”.
“The Commission will look closely at actions taken by regulated entities that could harm investors or unduly inhibit their ability to trade certain securities,” said SEC acting chairman Allison Herren Lee in a statement.
An army of ordinary investors, organized on Reddit forums like WallStreetBets, acted to prevent hedge funds from making huge profits by betting on the short sale that GameStop’s stock would plummet.
They spent millions buying shares in physical stores with financial difficulties, forcing many top-tier investment firms to sell at substantial losses or to incur even greater losses.
At one point, GameStop’s stock hit a record high of $ 492 before dropping to around $ 325 on Friday.
It was trading at $ 3.30 a share in 2019.
RobinHood, the popular stock trading app, drew widespread criticism when it temporarily suspended trading on GameStop until it retreated on Friday.
NBC News host Chuck Todd asked Deese if he thought short selling should be illegal.
“We are going to look at these issues and certainly fully understand this particular episode and the broader issues it contains. Our immediate focus here is to take the necessary steps to set a floor in this economic crisis, ”said Deese.