US Treasury Secretary Janet Yellen is scheduled to hold a meeting with top financial market regulators on Thursday to focus on recent trading volatility that saw shares like GameStop jump last week, reported AFP.
“We need to understand deeply what happened before we go to action, but certainly we’re looking carefully at these events,” Yellen said during an interview with ABC News. Although she did not commit taking any action.
“We’re going to discuss these recent events and discuss whether or not the recent events warrant further action,” she added.
Also read: Game over for GameStop’s wild Wall Street ride?
GameStop, a well-known retail chain whose business model of selling games on discs has been overtaken by the internet, has seen a precipitous drop in value that is the flip side of its incredible 400% surge last week.
This week, Yellen called for the meeting with the Securities and Exchange Commission (SEC), the New York Federal Reserve Bank and the Commodities Futures Trading Commission (CFTC) to review the volatility.
The events under review erupted when a group of small-time investors on Reddit joined forces to try to stop hedge funds that made massive bets that the shares would fall.
Instead of declining, the wave of buying boosted the share prices of struggling companies, including GameStop. Still, the share prices dropped sharply when the frenzy subsided.
The events led to some retail investor apps such as Robinhood — which says its goal is to “democratize finance for all” — to limit trading in some of the most volatile stocks last week, drawing the ire of critics.
Progressive US senators Bernie Sanders and Elizabeth Warren called for action against what they said were Wall Street abuses by hedge funds.