The U.S. Securities and Exchange Commission is “actively monitoring” volatility in options and equities after a market frenzy in the past week. The surge in GameStop Corp and other companies prompted Democratic Senator Elizabeth Warren to demand regulatory action.
- Retail investors drove GameStop’s shares in the past week, squeezing hedge funds with large short positions in the company, which attracted investors’ and legislators’ attention.
- GameStop’s shares more than doubled on Wednesday, triggering at least two volatility halts, and has surged eightfold in the past week, adding a market value of almost $20 billion.
- The SEC said it is assessing the situation and will review the activities of regulated entities, financial intermediaries, and other market participants.
- Apart from GameStop, U.S. regulators, and economic teams that include the Treasury are monitoring other heavily shorted companies.
- GameStop’s surge is believed to be fueled by retail traders spurred on by Reddit posts.
- Analysts refer to GameStop’s frenzy as a populist uprising against Wall Street institutions, while others see a dangerous play that could leave investors exposed to major losses.
GameStop stock is currently declining GME: NYSE is down 24.61% on premarket.