Yellen Meets With U.S. Financial Regulators Over GameStop Volatility
Treasury Secretary Janet Yellen has pledged to protect investors, saying that exchange regulators must fully scrutinize and draw conclusions about the recent trading frenzy involving GameStop and other abnormally jumped stocks before taking any action..
Janet Yellen noted that the underlying infrastructure of the financial market has proven to be robust amid high volatility and high trading volume around GameStop and other companies.
She added that timely scrutiny of these events by the SEC is essential..
«It is imperative to ensure the protection of investors as well as the proper, efficient functioning of our financial markets», – said the head of the US Treasury.
In her first media interview, Yellen stated that the president’s federal stimulus plan Joe Biden $ 1.9 trillion is needed to ease the economic fallout from the coronavirus pandemic that has left millions of Americans jobless.
«Even during the Great Recession, we didn’t have as many unemployed people. We must provide people with work and support them at all distances.», – Yellen said.
She said that Biden is committed to working with Republicans and still wants Congress to pass the plan on a bipartisan basis..
Yellen convened executives from the SEC, CFTC, Federal Reserve Board, and the Federal Reserve Bank of New York to discuss recent retail investor action and resolve «do these events deserve special intervention».
«Before we start to act, we need to understand what actually happened.», – she thinks.
The head of the Ministry of Finance did not specify what actions could potentially be taken by regulatory bodies to respond to the current situation..
Many on Wall Street have been overwhelmed by the sharp swings in the stocks of GameStop, Koss Corp, AMC Entertainment, and other businesses popular with Reddit users..
The concerted actions of retail investors triggered an abnormal rally in the aforementioned companies. Their goal was «teach a lesson» short dealers and hedge funds that profit from falling asset values. As a result, some large market participants suffered huge losses, urgently closing their positions.
GameStop closed Thursday down 42% at $ 53.50. A week ago, the cost of one share was $ 483. AMC Entertainment lost about two-thirds of its value after two weeks of feverish hesitation.
Most likely, the regulators paid special attention in their discussion to users of Reddit.
«Any kind of deliberate distortion of the market by investors goes against the healthy and transparent functioning of the sector», – said Andrea Cichione, Head of Strategy Department of TS Lombard, adding that such activities have not previously been thoroughly scrutinized by regulators.
SEC reviews social media posts for signs of potential fraud.