- Treasury Secretary Janet Yellen will meet with top financial regulators this week, Reuters reported.
- The SEC, the Federal Reserve, and other regulators will look into the GameStop-Wall Street saga.
- Yellen reportedly needed approval from ethics lawyers to call the meeting.
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Treasury Secretary Janet Yellen has called a meeting of top financial regulators for this week to look into market volatility amid the GameStop trading saga, Reuters reported.
The heads of the Securities and Exchange Commission and the Federal Reserve will reportedly attend.
Day traders banded together on Reddit to help bump up the prices of several stocks â€” most notably the video game retailer GameStop but also AMC, BlackBerry, and Nokia â€” last month after noticing that hedge funds were betting against them.
GameStop stock has gained massively in recent weeks, to an intraday peak of more than $US450 a share on Thursday from below $US5 late last year. As a result, some of Wall Street’s prominent hedge funds, including the hedge fund Citadel, were forced to close their bearish bets against the company, with hefty losses.
To arrange the meeting, Yellen had to get permission from ethics lawyers, Reuters reported, possibly because she has been paid more than $US700,000 in speaking fees by Citadel.
As Treasury secretary, Yellen was required to sign an ethics agreement mandating written approval before she could “participate personally and substantially in any particular matter” related to the firms from which she’s collected speaking fees.
The Treasury on Tuesday said Yellen would meet with the heads of the SEC, the Federal Reserve, the Federal Reserve Bank of New York, and the Commodity Futures Trading Commission, without providing a date. The meeting would happen this week, possibly as early as Thursday, a Treasury official who declined to be named told Reuters.
“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,” a Treasury representative told Reuters.
The online brokerage Robinhood responded to the stock frenzy by restricting purchases in highly volatile stocks on Thursday, causing GameStop to drop.
The saga has led some to question the balance of power in Wall Street and ask whether the markets favour massive hedge funds over individual investors. Both lawmakers and the general public have been calling on Washington to investigate.
The White House press secretary, Jen Psaki, said last week that Yellen was “monitoring the situation” around GameStop-related changes in the stock market.