The impact of social media on the market has attracted the attention of federal regulators, state authorities and congressmen.
The U.S. Securities and Exchange Commission (SEC) has suspended trading in Marathon Group, Affinity Beverage and Sylios shares until March 4. This is reported on the website of the regulator.
The SEC said that since the end of January, stock prices and trading volume have increased in the absence of any news and amid increased interest in the securities of these companies on social networks. According to the regulator, “certain users in social networks may be involved in a coordinated attempt to artificially influence” the prices of these securities.
The regulator will examine the actions of all participants in the recent auction. It will check for possible market manipulation, broker violations of trading rules, and hedge fund actions. Reuters writes that the unstable trading of securities, which arouse sudden interest among retail investors after discussion on social networks, has led to large losses for both hedge funds and private investors in recent weeks.
In January 2020, Robinhood disabled the purchase of shares of GameStop and others after their sharp rise due to Reddit users. After that, the investors filed a class action lawsuit against the service. The head of Robinhood, Vlad Tenev, explained that the service blocked “meme” shares due to an urgent demand for a huge deposit from a financial operator. Without restrictions and an urgent $1 billion investment, the future of the service was in jeopardy.
In February, the US Department of Justice launched an investigation into market manipulation following an investor war with Reddit and Wall Street.