The U.S. securities regulator is reviewing social media posts for signs of potential fraud in frenzied trading of GameStop Corp’s and other companies’ shares, Bloomberg News reported on Wednesday, citing people familiar with the matter.
The Securities and Exchange Commission’s examination of online posts is being done in tandem with a review of trading data to assess whether such posts were part of a manipulative effort to drive up share prices, the report said. A Reddit-driven rally has inflated stock prices for a number of previously downtrodden companies. (bloom.bg/3jgts2R)
A spokesperson for the SEC did not respond immediately to request for comment.
Earlier in the week, the SEC’s acting chair Allison Herren Lee said the agency is working “around the clock” to root out any potential market manipulation in the market volatility. Lee said in an interview with National Public Radio earlier this week that the current situation may be a “little bit more challenging” than the SEC’s typical work.
Users in the Reddit forum WallStreetBets have been encouraging buying of GameStop, AMC and other stocks, causing short-term surges in shares. Shares of GameStop rallied nearly 400% and have since tumbled about 80% from last week’s highs.
U.S. securities law bars the dissemination of any false or misleading information aimed at manipulating investors into buying or selling securities, and regulators have been expected to explore whether Reddit was used to do so.