Treasury Secretary Janet Yellen calls meeting with US market regulators to discuss volatility in the wake of GameStop mania
- Treasury Secretary Janet Yellen will meet with SEC, Federal Reserve, and CFTC officials regarding the Reddit-trader craze.
- The meeting will happen this week and could take place as early as Thursday, Reuters reported.
- Regulators haven't yet said they'll take action in the matter but indicated they're examining the phenomenon.
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Treasury Secretary Janet Yellen plans to meet with several finance-industry regulators to examine the intense market volatility spurred last week by retail investors piling into GameStop and other highly shorted stocks.
Yellen set up a meeting on Tuesday with the Federal Reserve Board, the Federal Reserve Bank of New York, the Securities and Exchange Commission, and the Commodity Futures Trading Commission, Reuters reported, citing a statement from the Treasury. The meeting will take place this week and could come as early as Thursday, according to the report.
The news signals officials at the highest level of market regulation are at least examining the retail-trader phenomenon that roiled the finance industry throughout last month.
"Secretary Yellen believes the integrity of markets is important and has asked for a discussion of recent volatility in financial markets and whether recent activities are consistent with investor protection and fair and efficient markets," Treasury spokeswoman Alexandra LaManna told Reuters in a statement.
Yellen received authorization from ethics lawyers to look into the matter before convening the meeting, Reuters reported. The Treasury Secretary received more than $700,000 in speaking fees from market-maker Citadel. The financial firm executed many of the trades that sent GameStop and other stocks skyrocketing last month.
Casual investors gathering on forums like the Wall Street Bets subreddit sent shares of GameStop, AMC Entertainment, and other unloved companies soaring in January. Some touted the trade as a way to burn short-selling hedge funds. Others simply viewed the trend as a get-rich-quick opportunity, leaving some to wonder whether the online conversations could be viewed as market manipulation.
Calls for government oversight were amplified on January 28 after Robinhood restricted clients from buying shares of GameStop and other stocks targeted by the retail-investor crowd. Republicans and Democrats in Congress moved for regulators to look into the policy, saying it hindered investors' access to a free market.
The House Financial Services Committee is scheduled to hold a hearing on the matter on February 18. Senators have indicated they too will hold a hearing on the GameStop rally.
Regulators haven't yet indicated they'll take action against either the investors or the brokerages that temporarily froze buying of the volatile stocks. The SEC's acting chair Allison Herren Lee told NPR on Monday that the agency is looking into the trading phenomenon "from a number of different angles," including claims that the Reddit users were manipulating the market.
"When we see stock prices depart so widely from fundamental valuations, we know there is a chance that people are going to get hurt, if not almost a certainty," Herren Lee said. "So we want people to know that there are risks involved here."