US: Yellen summons financial regulators for volatility
Treasury secretary to review high market volatility, broker behavior as GameStop stocks surge, RobinHood app limits users
US Treasury Secretary Janet Yellen has summoned American financial regulators to discuss the high volatility recently seen in the markets, according to the Treasury Department.
Officials of the Securities and Exchange Commission (SEC), the Federal Reserve Board, the Federal Reserve Bank of New York, and the Commodity Futures Trading Commission have been called for the meeting.
"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," the department said in a statement late Tuesday.
Yellen is expected to discuss with regulators a wide range of issues amid high volatility and broker behavior that have become center of attention of global markets since last week.
Small retail investors in a reddit group started coordinating on taking long positions in cheap stocks and causing massive losses for some Wall Street hedge funds with short positions before broker app RobinHood limited some of its users' financial transactions.
Such cheap stocks like GameStop saw its share price pumped 1-to-20 in two weeks before plummeting by 60% on Tuesday. After a similar strong rally, AMC Entertainment stocks was also dumped by 40%, adding frenzy to the volatility.
The SEC said Friday it is looking into any potential misconduct in broker firms' decisions that limited retail investors' transactions.
Small investors also coordinated to pump prices of silver and cryptocurrency Ripple on Monday, as both saw short-lived rallies before being dumped by large investors, giving away most of their gains.