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President Biden’s top economic adviser said the administration will take a look at the legal questions surrounding the roller-coaster ride GameStop took last week as small-dollar traders squared off against well-heeled hedge fund managers, sending its stock soaring to astronomical levels.
“I could tell you the SEC is focused on understanding fully what happened here. And their focus is on protecting retail investors and also the integrity of the market,” Brian Deese, the head of the National Economic Council, told NBC News’ “Meet the Press.”
The Securities and Exchange Commission said last Friday that it will take action “to identify and pursue potential wrongdoing.”
“The Commission will closely review actions taken by regulated entities that may disadvantage investors or otherwise unduly inhibit their ability to trade certain securities,” acting SEC chair Allison Herren Lee said in a statement.
An army of everyday investors, organized on Reddit forums like WallStreetBets, acted to counter the hedge funders from raking in huge profits by betting via short selling that GameStop’s stock would plummet.
They spent millions buying the financially struggling brick-and-mortar store’s stock, forcing many top-tier investment firms to sell at a substantial loss or incur even steeper losses.
At one point, GameStop’s stock hit an all-time high of $492 a share before falling back to around $325 on Friday.
It had been trading as low as $3.30 a share in 2019.
RobinHood, the popular stock trading app, prompted widespread criticism when it temporarily halted trading on GameStop until backing off on Friday.
NBC News’ host Chuck Todd asked Deese if he thought short selling should be illegal.
“We’re going to look at those issues and certainly understand fully this particular episode and the broader questions there. Our immediate focus here is on taking the action we need to put a floor under this economic crisis,” Deese said.
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