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Yellen convenes US market regulators to discuss GameStop
Yellen said officials will be "looking carefully at these events."
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The GameStop logo sign is seen above the store in Culver City, California on January 28, 2021. An epic battle is unfolding on Wall Street, with a cast of characters clashing over the fate of GameStop, a struggling chain of video game retail stores. The conflict has sent GameStop on a stomach-churning ride with amateur investors taking on the financial establishment in the mindset of the Occupy Wall Street movement launched a decade ago. (Agence France Presse/Chris Delmas)
U
S Treasury Secretary Janet Yellen will hold a meeting Thursday with top financial market regulators to discuss recent trading volatility that saw shares like GameStop soar last week.
Yellen said officials will be "looking carefully at these events."
The volatility was created following a social-media-fueled buying frenzy over shares in video game store GameStop and other stocks shorted by hedge funds. These shares surged over 400 percent before falling sharply.
Yellen this week called for the meeting with the Securities and Exchange Commission, the Federal Reserve and the Commodities Futures Trading Commission to review the volatility.
"We really need to make sure that our financial markets are functioning properly, efficiently and that investors are protected," she said in her first television interview on ABC's "Good Morning America" on Thursday.
"We're going to discuss these recent events and discuss whether or not the recent events warrant further action."
The events under review erupted when a group of small-time investors on Reddit joined forces, boosting the share prices of struggling companies, including GameStop and movie theater brand AMC Entertainment, to try to thwart hedge funds that bet the shares would fall.
The moves led to some retail investor apps such as Robinhood -- which says its goal is to "democratize finance for all" -- to limit trading in some of the most volatile stocks last week, drawing the ire of critics.
Progressive US senators Bernie Sanders and Elizabeth Warren called for action against what they said were Wall Street abuses by hedge funds.
"We need an SEC investigation," Warren told CNN Sunday. "It's a rigged game, and it's been a set of players who come in and manipulate the market."
But Yellen said "we need to understand deeply what happened before we go to action."
Yellen had to receive a waiver from ethics lawyers at Treasury to hold the discussion, as she had received at least $700,000 in speaking fees from hedge fund Citadel, a key player in the GameStop saga, according to US media reports.
