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The Wall Street Journal (WSJ) reported on the 11th (local time) that the U.S. Department of Justice, federal prosecutors and regulatory authorities are investigating whether stock prices have been manipulated in relation to the’game stop incident’.
The Ministry of Justice and the San Francisco Federal District Attorney’s Office are seeking information on related activities from stock exchanges and social media companies that have been the epicenter of the GameStop stock frenzy, officials said. The prosecution is reported to have sent subpoenas to some securities companies, such as Robin Hood, which individual investors used to trade stocks such as GameStop, requesting data submission.
When it became known that the short selling rate of GameStop, a video game distribution chain, was about 140%, voices to buy the stock began to appear in the online community Reddit’s discussion room’Wall Streetbets’. After that, it showed high volatility, rising vertically from $20 to $483 and then falling back to $50. This incident attracted a lot of attention as individual investors won the fight against short selling, but some raised suspicion that there is a possibility that stock prices may be raised through social media. According to the WSJ, some experts argue that some ants have participated in a kind of price manipulation called’pump and dump’ through reddit bulletin boards. A pump and dump is an illegal transaction in which false information about stocks purchased at a bargain price is spread online to raise stock prices and then sells the stock to obtain a profit.
Prosecutors and regulators are likely to first determine who actually bought and sold GameStop stock from the data used by securities companies. However, even if you understand the transaction details, it will not be easy to contrast with publishers who have posted related articles on social media. This is because most users post anonymously on Reddit.
If it is investigated that a small number of key figures incited the purchase of the GameStop group, this situation is expected to turn into a stock price manipulation case. However, it is impossible to prosecute a large number of users who had traded small amounts or believed to participate in the’war with hedge funds’, securities law lawyers explained. In addition to the Ministry of Justice and the prosecution, the Securities and Exchange Commission (SEC) has also revealed that it is looking into whether there has been any illegal activities such as market manipulation related to GameStop.
Separately, the US Commodity Futures Trading Commission (CFTC) is investigating the intensive buying of silver futures and silver ETFs (listed index funds) by individual investors through the Reddit discussion room, similar to Gamestop, WSJ said.
/ Reporter Kim Yeon-ha [email protected]
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