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Wall Street Turbulence Catches Attention Of White House, Regulators

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Wall Street Turbulence Catches Attention Of White House, Regulators

The massive rise in the valuations of GameStop Corp (NASDAQ: GME), AMC Entertainment (NYSE: AMC) and other widely shorted stocks due in large part to retail traders on Reddit and elsewhere has drawn interest from regulators and even the White House.

White House Chimes In: Press Secretary Jen Psaki told media the White House was "monitoring" what was happening with GameStop stock after being asked a question in Wednesday's briefing.

"The stock market isn’t the only measure of health of our economy,” Psaki said. A team that includes new Treasury Secretary Janet Yellen will advise on the situation.

SEC Issues Statement: After the market close Wednesday, the U.S. Securities and Exchange Commission issued a statement on the market volatility. 

"We are aware of and actively monitoring the on-going market volatility in the options and equities market and, consistent with our mission to protect investors and maintain fair, orderly, and efficient markets, we are working with our fellow regulators to assess the situation."

The joint statement comes from acting SEC Chair Allison Herren Lee, Director of the Examinations Division Pete Driscoll and Division of Trading and Markets Acting Director Christian Sabella. 

See Also: 'The Little Guy Won': PreMarket Prep Breaks Down The Retail Squeeze, Shorts Running Scared And More

Massachusetts Calls For Regulation: The Massachusetts Secretary of the Commonwealth is calling for restrictions.

“The marketplace should be a place where risk is taken, but not reckless risk,” William Galvin told CNBC. The size of the short position of a company like GameStop should be "addressed immediately," Galvin said.

Galvin, who was a regulator during the dot-com bubble of 1999, says the uncertainty of the market causes rapid rises in speculative names.

“They think they’re missing out if they don’t make a bet on them. Unsophisticated investors are going to get hurt by this," he said.

Elizabeth Warren Says 'Do Your Job': Senator Elizabeth Warren shared her take on the run in shorted stocks.

“For years, the same hedge funds, private equity firms and wealthy investors dismayed by the GameStop trades have treated the stock market like their own personal casino while everyone else pays the price,” Warren said.

Warren said the stock market doesn’t reflect the actual economy, adding that millions are out of work and struggling while stocks hit all-time highs.

“It’s long past time for the SEC and other financial regulators to wake up and do their jobs – and with new administration and Democrats running Congress, I intend to make sure they do.," she said.

 

Related Articles (GME + AMC)

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