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Yellen convenes US market regulators to discuss GameStop

By AFP - Feb 04,2021 - Last updated at Feb 04,2021

This photo illustration taken on January 28, 2021 shows the logos of video grame retail store GameStop and trading application Robinhood in a computer and on a mobile phone in Arlington, Virginia. (AFP file photo)

WASHINGTON — US Treasury Secretary Janet Yellen will hold a meeting on 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 per cent before falling sharply.

This week, Yellen 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 on 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.

 

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