#SECCrypto #KITTY #GameStop #business #GME
Investing.com - Interest in so-called meme stocks has returned to the US stock market, but the rise in shares of troubled gaming company GameStop has not only attracted investor interest, but also the regulator's close attention to possible market manipulation, writes Business Insider.
It all started when a tweet from X-account video gamer Keith Gill, under the pseudonym "Roaring Kitty," brought GameStop stock back to life in May and soon sent it soaring more than 180%.
In June, bullish sentiment lifted GameStop again as Reddit account "DeepFuckingValue" posted a snapshot of its position in the company's shares - the user bought 5 million shares worth almost $116 million, 120,000 options contracts worth almost $66 million, and also showed a cash position of $29 million, totaling $211 million. On June 3, the user added another post, where he showed a profit of almost 32% on shares and 76% on options, resulting in a total value of $289 million.
Analysts say such a large position means whoever owns the Reddit Inc (NYSE:RDDT) account almost certainly wants the stock to rise even higher. Keith Gill's constant promotion of shares has raised questions about whether he is manipulating the market and therefore coming under scrutiny from regulators, the US Securities and Exchange Commission (SEC).
And the latter was not long in coming: on Wednesday, the head of the SEC, Gary Gensler, said that the Commission is an “operational police officer,” that is, it is investigating the case, but has not yet disclosed information until the case goes to court, and also warned against any actions that may manipulative or misleading. According to Gensler, disclosing information does not necessarily protect bad actors if they are manipulating the market, and information cannot simply be disclosed, especially if it misleads the market.
But there is another opinion on this matter. Securities law lawyers say Gill had every right to publish messages about GameStop.
Back during the pandemic in 2021, Gill posted videos on YouTube promoting both GameStop and its stock, which greatly fueled the interest of retail investors who began accumulating positions in GME, creating further hype on social media and driving the stock to a 2000 peak. %. But the boom came as a blow to Wall Street hedge funds, which bet against the company's stock because of its weak fundamentals and ended up losing billions.
The difference between the current situation and 3 years ago is that Gill is not making recommendations or asking anyone to buy shares, but simply publishing his position. Moreover, Gill is not an insider in GameStop and therefore cannot use the information to influence the stock price.
Manipulation typically involves materially false statements that are intentionally misleading. Therefore, it is not yet clear what is happening and who will have the last laugh: the SEC or an active Reddit user.
