Clash between retail traders and Wall Street professionals that sparked roller coaster rides in the shares of GameStop Corp may pose a risk to dozens of other stocks and potentially create a headache for the broader market, analysts said.
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(Reuters) - The U.S. Securities and Exchange Commission waded into the battle between small investors and Wall Street hedge funds on Friday, warning brokerages and social-media traders it was on alert for any wrongdoing in this week’s roller-coaster trade.
GameStop shares rallied again, awarding retail investors the advantage in the latest round of their week-long slugfest against major financial institutions that had shorted the video game retailer.
The so-called “Reddit rally” has inflated stock prices for GameStop and other previously downtrodden companies that individual investors championed on social media forums such as Reddit’s Wallstreetbets, which has almost 6 million members.
By Sagarika Jaisinghani, Shriya Ramakrishnan and Anna Irrera (Reuters) - An army of retail investors that has routed Wall Street s professionals in recent days was dealt a blow on Thursday, after online brokerages restricted trading in red-hot GameStop and other stocks that had soared this week. But the shares rebounded in after hours trading, resuming their advances after Robinhood Markets Inc and Interactive Brokers said they planned to lift the restrictions on Friday. Retail investors, celebrities and policymakers had denounced Thursday s restrictions and participants in online forums seethed, accusing the trading platforms of seeking to protect Wall Street s interests at the expense of smaller investors.
GameStop, the video game retailer whose 1,700% rally has been at the heart of the slugfest in the past week.
BENGALURU: An army of retail investors that has routed Wall Street s professionals in recent days was dealt a blow on Thursday, after online brokerages restricted purchases of red-hot GameStop and other stocks that had soared this week.
But the shares rebounded in after hours trading, resuming their advances after Robinhood Markets Inc and Interactive Brokers said they planned to lift the restrictions on Friday.
Retail investors, celebrities and policymakers had denounced Thursday s restrictions and participants in online forums seethed, accusing the trading platforms of seeking to protect Wall Street s interests at the expense of smaller investors.
GameStop s rally cools as U.S. regulators eye wild trading
Robinhood said on its website that it was easing some restrictions, but still not allowing purchases of fractional shares in GameStop and 12 other companies, effectively meaning smaller investors have to bet more in order to buy in further to the trade.
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Sagarika Jaisinghani and Medha Singh / Reuters | 2:14 pm, Jan. 29, 2021 ×
A GameStop store is seen in New York on Jan. 27. REUTERS/Nick Zieminski/File Photo
Jan 29 (Reuters) - The U.S. Securities and Exchange Commission waded into the battle between small investors and Wall Street hedge funds, warning brokerages and the pack of social-media traders that it was watching for potential wrongdoing.