US regulator weighs in with warning it will not tolerate market manipulation
US regulators on Friday said they would review trading curbs imposed by Robinhood and other online brokerages and act on evidence of market manipulation, as GameStop and other targeted stocks resumed their Reddit-fuelled rally.
The statement from the Securities and Exchange Commission followed a move by Robinhood, the online broker used by a new army of day traders, to raise $1bn in convertible debt to shore up its finances. On Thursday, it had been forced to halt trading in some of its most-traded stocks.
The cash infusion allowed it to lift some of the curbs, prompting share prices to surge once again. GameStop, the video game retailer at the centre of the frenzy, was up 75 per cent by lunchtime in New York, recouping all Thursday’s losses, which were triggered by the trading limits. Year-to-date gains have topped 1,500 per cent.
GameStop is one of a handful of stocks targeted by users of Reddit message boards in the hope of inflicting losses on hedge funds that had bet heavily against the company. When brokerages curtailed trading on Thursday, users reacted with outrage and politicians demanded an investigation.