The trading frenzy that saw unexpected surges in GameStop, AMC and other stocks got the attention of federal regulators who are now investigating the rally for market manipulation or other misconduct, The Wall Street Journal reported on Tuesday (Feb. 11), citing sources.
Companies involved in last month’s trading frenzy have been asked for information by the U.S. Department of Justice and the San Francisco U.S. attorney’s office, the sources said, according to the news outlet.
The investment platform Robinhood, which was the center of activity for much of the trading, was subpoenaed by prosecutors to turn over information, the sources said, per the Journal.
The Commodity Futures Trading Commission (CFTC) has also launched its own probe into the matter, the sources said, per the WSJ. The CFTC is looking into whether there was misconduct associated with some Reddit traders, silver futures and the iShares Silver Trust, the biggest exchange-traded fund tied to silver, the sources said.
The trading frenzy saw GameStop shares skyrocket from a starting point of about $20 to a high of $483 across a handful of days in January. The share price is now trading around $50, the Journal reported.
The catalyst for the unusual streak of events was said to be instigated in part by traders on the social media platform Reddit. The price surge worked against hedge funds who had shorted the stock, some losing billions.
The trading saga sparked conversations about ways to improve financial literacy in the country. Yinon Ravid, CEO of the app-based advisory firm Albert, told PYMNTS that while money is a touchy subject for most people, they will benefit from expert advice.
Keith Gill, a Youtube streamer by the name of “Roaring Kitty,” was subpoenaed by Massachusetts securities regulators for his alleged role in helping encourage the GameStop trading frenzy in January.