SEC Hunts for Fraud in Social-Media Posts Hyping GameStop
- Agency’s scrutiny is part of broader look into market tumult
- Regulator specifically seeking signs of market manipulation
U.S. Securities and Exchange Commission investigators are combing social media and message board posts for signs that fraud played a role in dizzying stock swings for GameStop Corp., AMC Entertainment Holdings Inc. and other companies, according to people familiar with the matter.
The scrutiny is being done in tandem with a review of trading data to assess whether such posts were part of a manipulative effort to drive up share prices, said the people, who requested anonymity because the review isn’t public. The regulator is specifically on the hunt for misinformation meant to improperly tilt the market, the people said.
The prevailing narrative is that Wall Street short-sellers were caught flatfooted over the past two weeks as retail traders banded together via Reddit message boards and bought up stocks that hedge funds were betting against. But some market participants, including famed short-seller Carson Block, have started to speculate that the short squeezes that drove GameStop, AMC and other stocks to exorbitant heights might have also involved professional investors who either took advantage of the Reddit-fueled frenzy or helped hype it.