(Adds details on market volatility, ethics memo)
WASHINGTON, Feb. 2 (Reuters) – US Secretary of the Treasury Janet Yellen is convening a meeting of key financial regulators this week to discuss the market volatility driven by GameStop Corp retail and other stocks.
Yellen will convene the heads of the Securities and Exchange Commission, the Federal Reserve, the Federal Reserve Bank of New York and the Commodity Futures Trading Commission, a Treasury official said Tuesday.
Yellen sought and obtained approval from ethics attorneys before calling the meeting, according to a document seen by Reuters, dealing with a variety of issues in the financial services industry.
Yellen’s decision to file for the waiver followed a report here by Reuters that she was paid for speaking fees by a key player in the GameStop saga, hedge fund Citadel LLC. firm.
The finance minister, who declined to be named, said the meeting would take place this week, possibly as early as Thursday.
Secretary Yellen believes the integrity of markets is important and has called for a discussion of recent volatility in financial markets and whether recent activities are consistent with investor protection and fair and efficient markets, said Treasury spokeswoman , Alexandra LaManna, in a statement to Reuters.
Yellen’s move comes after days of swings in video game retailer GameStop’s stock, propelled by private investors who have made or lost billions of dollars to hedge funds and other investors in recent weeks. Retail has also pushed up silver prices in recent days.
GameStop shares more than halved in value on Tuesday, and the price of silver fell as the Reddit-fueled trading frenzy that drove the stock and commodities markets down, at least for now.
GameStop shares closed 60% at $ 90. They are now worth less than a fifth of their all-time high of $ 483 last week.
The saga is likely to hasten a regulatory overhaul of the growing role of non-bank companies in financial markets, regulatory experts say.
The Treasury’s ethics lawyers have given Yellen the flexibility to work on any related issues that arise, without constraints on current or future markets, the Treasury Secretary said.
In the memo in which Yellen authorized the convening of the meeting of regulators, Brian Sonfield, an ethics officer in the Treasury Department, said it would be “difficult, if not impossible” for Yellen to refuse to act on matters that were dealing with market volatility.
“You are the secretary of the Treasury, and your duties require you to be involved in a wide variety of matters pertaining to these sectors,” wrote Sonfield.
“Problems related to these sectors can arise at any time without the opportunity to consult with the ethics office. These circumstances make it difficult, if not impossible, for you to withdraw from matters related to these industries, and also call for prior approval. “
Reporting by David Lawder and Trevor Hunnicutt; Additional reporting by Andrea Shalal; Editing by Heather Timmons, Cynthia Osterman and Peter Cooney