Yellen called a meeting with the Securities and Exchange Commission, the Federal Reserve Board, the Federal Reserve Bank of New York and the Commodity Futures Trading Commission, the Treasury said in a statement late Tuesday.
“Secretary Yellen believes the integrity of markets is important and has asked for a discussion of recent volatility in financial markets and whether recent activities are consistent with investor protection and fair and efficient markets,” the Treasury said.
Read more: Washington Lets Stock Mania Unfold in Reminder of Market’s Risks
Market experts have raised questions about whether the trading controversy around GameStop and Robinhood could help erode investor trust and the integrity of financial markets. As Treasury secretary, Yellen is chair of the Financial Stability Oversight Council, which was set up in the wake of the global financial crisis to monitor systemic risks. This week’s meeting about GameStop is not a formal FSOC meeting.
GameStop, a video-game retailer, was one of a handful of companies whose shares began soaring in late January, driven by an army of retail investors active on the online forums hosted by Reddit. Some investors openly called on others to bid up the shares of certain names in order to trigger losses for hedge funds that had bet their prices would fall.
GameStop shares went from $19.95 to a peak of $347.51 on Jan. 27 in just 10 trading days, and with no meaningful change in the company’s profit outlook. It has since swung wildly and fell 60% to close at $90 on Tuesday.
The wild trading has left politicians in both parties in two branches of government grasping for responses to the new phenomenon of retail investors banding together on social media.
On Monday, the House Financial Services Committee announced that it would hold a hearing on Feb. 18 regarding “recent market volatility” involving GameStop and other companies.
(Updates with background, starting in the fourth paragraph.)
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