The chaos in the U.S. stock market following the GameStop trading frenzy and investment brokerages stopping investors from buying GameStop stock has led the Securities and Exchange Commission (SEC) to investigate the matter. President Joe Biden has signaled to Wall Street that there will be consequences for any wrongdoing.
Both the Justice Department’s criminal division and Securities and Exchange Commission are investigating if market manipulation occurred and are examining any potential misconduct. The current administration in contrary to the previous administration will be stricter on Wall Street and will incite harsher penalties on any wrongdoers. If investment brokerages like Robinhood stopped people from investing in GameStop when they shouldn’t have, it is considered wrongdoing.
Attorneys in the Justice Department’s criminal division have issued a written command requesting that RobinHood CEO to attend court. The Justice Department is looking into if brokers complied with regulations. Likewise, the SEC has suspended trading in Spectra Science, another company that has seen its stock Zoom because of social media chatter.
Following the trading frenzy in more than one company, the SEC advises every investor to exercise extreme caution when investing in stocks based on social media or a sudden interest in a company. I personally do not believe anyone with high stakes should invest in these frenzy-driven companies. After all, what goes up must come down but if you have researched a company and believe this company’s new invention for example is going to be widely used, then it is right to invest. Base your judgment on research.
References:
1) Tory Newmyer, M. (2021, February 14). Wall Street regulators signal tougher approach to industry after Gamestop frenzy. Retrieved February 14, 2021, from https://www.washingtonpost.com/business/2021/02/14/sec-gamestop/
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