A few weeks ago, amateur investors who frequented the WallStreetBets subreddit started a run on GameStop’s stock. That run saw the stock shoot through the roof, eventually hitting more than $400 per share. Once the rest of the market noticed the company’s price shot up the way it did, several companies took action to stop the run. Some firms, such as Robinhood, even went so far as to force their customers to sell whatever shares they’d purchased. While the situation seems to be returning to normal, the book isn’t quite closed.
As the dust starts to settle on the GameStop stock situation, it appears questions surrounding exactly what happened isn’t going away. In fact, federal law enforcement appears ready to jump into the fray to try and get to the bottom of how GameStop’s stock price skyrocketed and then dropped precipitously.
While one probe has been launched into those involved in GameStop’s stock price fluctuation that could lead to criminal charges, it’s not the only one being carried out. The Commodity Futures Trading Commission and Securities and Exchange Commission (SEC) also launched probes this week. The parallel probes could end up being a double whammy to anyone found to have committed wrongdoing. Not only could someone be facing jail time, but they could also get hit with substantial financial penalties.When GameStop’s stock dropped at the speed it did, many individuals lost quite a bit of money likely prompting the federal government to get involved. Earlier this week, the Wall Street Journal reported that both the Justice Department’s fraud section and the San Francisco U.S. attorney’s office are investigating the situation. The agencies are seeking information from brokers, as well as social media companies that were at the center of the trading frenzy.
The state of Massachusetts recently joined the fray as well, forcing former insurance marketer Keith Gill, a member of the WallStreetBets subreddit to testify in state court. He’ll be appearing later this month, and that could be right around the same time that Congress officially begins its own probe.
While some, like xQc think those harmed by the GameStop stock surge foolish, the federal government wants to get to the bottom of how exactly it happened. At the beginning of 2021, the company’s stock price was sitting in the low double digits per share. By the time the smoke cleared on the meme stock bubble, GameStop shares were trading for more than $400 apiece.