Federal prosecutors are investigating whether market manipulation or other types of criminal misconduct powered the swift rise last month in prices of stocks such as GameStop Corp. and AMC Entertainment Holdings Inc.The Justice Department’s fraud section and the San Francisco US attorney’s office have sought information regarding the activity from brokers and social-media companies that were hubs for the trading madness. Prosecutors have subpoenaed information from brokers such as Robinhood Markets Inc., the popular online brokerage that many individual investors used to trade Gamestop and other shares.GameStop shares soared from roughly $20 to $483 over a period of two weeks in January. The stock has since dropped to roughly $50. It was powered by an army of bullish individual traders encouraging one another on Reddit to acquire the shares and squeeze hedge funds that bet the price would drop. Traders who bet stock prices will decline are known as short sellers. In addition to the probe by the Justice Department, the Commodity Futures Trading Commission is examining similar trading. The CFTC has opened a preliminary investigation into whether misconduct occurred as traders, including those coordinating on Reddit, targeted silver futures and the biggest exchange-traded fund tied to Silver, the iShares Silver Trust.
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