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Executive Risk FPN - Monday, February 8, 2021

   
SEC investigates fraud in GameStop and Reddit case
SEC investigates fraud in GameStop and Reddit case
Publication Date 02/04/2021
Source: CE Noticias Financieras (Latin America)

The U.S. Securities and Exchange Commission (SEC) is reviewing social media posts for signs of possible fraud behind the recent trade frenzy over the shares of GameStop Corp and other companies. This was released by Bloomberg News on Wednesday, citing people familiar with the matter.

Scrutiny is carried out in conjunction with a review of trade data to assess whether such publications were part of a manipulative effort to boost stock prices, according to the report.

The information published by the economics and finance site was released at the same time as the Reuters agency stated that the director of the SEC will meet with Treasury holder Janet Yellen and the directors of the Federal Reserve (EDF) and the Commodity Futures Trading Commission on Thursday. That's what a Treasury official told Reuters.

Yellen has asked to look at recent volatility and whether stock exchanges have been consistent with fair and efficient markets.

It is unclear whether this will translate into measures, but experts foresees that attention will also focus on the increasingly important role that non-bank companies such as investment funds play in financial markets and that small operators are preparing for a crash.

"I find titans. It will happen tomorrow with Yellen, the SEC and the Federal Reserve," said a Wednesday post on Reddit. "They're going to try to stop the party or they're looking for money to pay us and not sink everything at the same time."

Small investors' share of stock markets has soared in the past year, as pandemic confinements, volatility, and fiscal and monetary stimulus measures have prompted a global fever from speculation about short-term securities trading.

The phenomenon has boosted stock indices from New York to Seoul at record levels and boosted the price of assets ranging from cryptocurrencies to new IOS.

The approach to GameStop's short sellers took the phenomenon to a new level, as small operators apparently acted in concert when organizing purchases through Reddit. Messages encouraging the purchase of silver also boosted prices on Monday, although the impact proved short-lived.

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