President Biden’s top economic adviser said the government will take a look at the legal questions surrounding GameStop’s rollercoaster ride last week, as small dollar traders pitted against wealthy hedge fund managers, pushing their stocks to astronomical levels.
I could tell you that the SEC is focused on fully understanding what happened here. And their focus is on protecting private investors and also on the integrity of the market, ”said Brian Deese, the head of the National Economic Council. NBC News’ “Meet the Press.”
The Securities and Exchange Commission said on Friday it will take action “to identify and pursue potential wrongdoing.”
“The Commission will closely monitor measures by regulated entities that could harm investors or otherwise improperly prevent their ability to trade certain securities,” acting SEC Chairman Allison Herren Lee said in a statement.
An army of everyday investors, hosted on Reddit forums such as WallStreetBets, acted to stop the hedge financiers from reaping huge profits by short selling betting that GameStop’s stock would fall.
They spent millions buying the financially struggling brick-and-mortar store, forcing many leading investment firms to sell at significant losses or even greater losses.
At one point, GameStop’s stock hit a record high of $ 492 per share, before falling to around $ 325 on Friday.
It traded as low as $ 3.30 a share in 2019.
RobinHood, the popular stock trading app, caused widespread criticism when it temporarily halted trading on GameStop until it went back on Friday.
NBC News’ presenter Chuck Todd asked Deese if he thought short selling should be illegal.
“We’re going to look at those issues and certainly fully understand this particular episode and the broader questions there. Our immediate focus here is on taking the steps we need to build a floor under this economic crisis, ”said Deese.