The US Securities and Exchange Commission on Friday morning released an official statement regarding the ongoing volatility in the market owing to the surging price of GameStop (GME) and AMC.
Nasdaq and Robinhood suspended the trading of GME and AMC citing market manipulation. The outrage after the halting caught the eye of congresswoman Alexandria Ocasio Cortez, who called for an investigation.
Statement of Acting Chair Lee and Commissioners Peirce, Roisman, and Crenshaw regarding recent market volatility: https://t.co/7BS7LP0SRY
— SEC_News (@SEC_News) January 29, 2021
The SEC in its official statement said,
The Commission is closely monitoring and evaluating the extreme price volatility of certain stocks’ trading prices over the past several days. Our core market infrastructure has proven resilient under the weight of this week’s extraordinary trading volumes. Nevertheless, extreme stock price volatility has the potential to expose investors to rapid and severe losses and undermine market confidence.
SEC Promises to Protect Real Investors
The recent price surge of GME shares owing to a short squeeze created by a bunch of Redditors and retail investors caused many hedge funds to lose billions on their short positions. Many jumped to call it a market manipulation leading to a series of events that led to the involvement of government agencies such as the SEC and DOJ.
The price of GME shares fell yesterday during the late evening due to the halt of trade. However, as soon as the restrictions were lifted the price of GME soared again.
JUST IN: Gamestop shares surge by over 90% at trade open
— The Spectator Index (@spectatorindex) January 29, 2021
The official statement of the SEC came on behalf of Acting Chair Allison Herren Lee, Commissioner Hester M. Peirce, Commissioner Elad L. Roisman, and
Commissioner Caroline A. Crenshaw and promised that they would act to protect real investors and maintain a free and fair market.
The SEC also took note of retail traders and said,
Also, we will act to protect retail investors when the facts demonstrate abusive or manipulative trading activity that is prohibited by the federal securities laws. Market participants should be careful to avoid such activity. Likewise, issuers must ensure compliance with the federal securities laws for any contemplated offers or sales of their securities.