Yellen to discuss ‘meme-stock’ volatility on Wall Street with top regulators

Ruben Onsu

Treasury Secretary Janet Yellen will host a meeting with top federal regulators to address the recent market volatility on Wall Street spurred by so-called “meme stocks,” the department announced Tuesday night. Yellen will meet with the heads of the Securities and Exchange Commission, the Federal Reserve, the Federal Reserve Bank […]

Treasury Secretary Janet Yellen will host a meeting with top federal regulators to address the recent market volatility on Wall Street spurred by so-called “meme stocks,” the department announced Tuesday night.

Yellen will meet with the heads of the Securities and Exchange Commission, the Federal Reserve, the Federal Reserve Bank of New York and the Commodity Futures Trading Commission. The exact timing of the meeting wasn’t announced, but officials said it could happen as early as Thursday.

Yellen will seek to discuss “whether recent activities are consistent with investor protection and fair and efficient markets,” the statement said.

At the center of the trading is the commission-free online brokerage Robinhood. Online traders used the platform to push up stocks of GameStop and AMC Entertainment Holdings, which had been heavily shorted, and bragged about their gains on social media forums on Reddit. Robinhood eventually ended up restricting trading in stocks caught up in this wave of buying until it could raise capital and increase its required margin deposits with the clearing house, and has been easing these restrictions slowly.

Last week, the SEC said it was monitoring trading activity and was prepared to take aggressive enforcement action.

Legal experts think there will be a regulatory response. For instance, they questioned the real reason Robinhood was able to halt trading in volatile stocks and whether all investors were treated equally.

Trading in GameStop
GME,
+7.11%

and AMC Entertainment
AMC,
+7.67%

was more subdued on Wednesday.

Dallas Fed President Rob Kaplan said Tuesday he didn’t see “systemic” market issues with the GameStop market mania. Analysts agreed.

“There were fears that the GameStop trading frenzy would spill over into the broader market. That doesn’t seem to have been the case,” Michael Reynolds, investment strategy officer at Glenmede Trust, told MarketWatch in an interview. “It’s a return to the same drivers of the market. Fiscal stimulus and vaccine progress continue to be tailwinds.”

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