Yellen calls regulator meeting on GameStop
Treasury Secretary Janet Yellen will meet this week with financial regulatory groups to address recent stock spikes in GameStop and other commodities after armchair investors on Reddit fueled surprise fluctuations in the market.
The meeting will scrutinize findings from the Securities and Exchange Commission (SEC) over the investments and will include the Federal Reserve, the New York Fed and the Commodity Futures Trading Commission.
“Secretary Yellen believes the integrity of markets is important and has asked for a discussion of recent volatility in financial markets and whether recent activities are consistent with investor protection and fair and efficient markets,” Treasury Department spokesperson Alexandra LaManna told The Hill Wednesday.
News of the meeting comes as lawmakers sound the alarm over the fallout of the fluctuations. Bipartisan members of Congress expressed concerns that Robinhood Financial, through which many of the Reddit investors made their trades, curtailed trading in GameStop, AMC Entertainment and other stocks after the price of their shares skyrocketed.
Robinhood said it restricted trade due to a demand for $3 billion to back up the moves, though critics panned the decision as an effort to protect Wall Street investors who had shorted the stocks.
The sharp spike in stocks appears to be reversing. GameStop saw its stock price shoot up to a high of $483, though closed down 60 percent at $90 Tuesday.
Advocates of the surge touted it as a win for small investors over Wall Street, but market observers have warned that such fluctuations could impact confidence in the stock market.
“Extreme stock price volatility has the potential to expose investors to rapid and severe losses and undermine market confidence,” the SEC said last week.
News of the meeting with Yellen was first reported by Reuters.