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GameStop’s Stock Surge Tests Scope of SEC’s Manipulation Rules

Published by

December 5, 2024
(GMT+2)

Bullish day trades have rallied together to buy shares of GameStop Corp. in recent weeks, driving up the price more than 10-fold and prompting complaints that the frenetic activity is manipulative. The frenzy has played out on public websites such as Reddit’s WallStreetBets, where small investors brag about their gains and encourage others to buy more shares and options. That transparency could make it easier for regulators to levy claims of manipulation, which historically has been a difficult offence for regulators to prove.The two-week rally in shares of GameStop, once one of the most heavily shorted stocks, has captivated the stock market. The winners have been small investors whose hectic buying has also pushed up prices of AMC entertainment Holdings Inc. and Bed Bath & Beyond Inc. The losers have been some hedge-fund managers and other contrarian investors who had bet against the future of the struggling videogame retailer.

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