Senate and House committees to hold hearings on GameStop trading fallout
(Worthy News) – Both the House Committee on Financial Services and the Senate Banking Committee announced Friday that they will hold hearings regarding “recent market instability” after a number of major online stock brokerages introduced restrictions on trades involving tech stocks commonly shorted by institutional investors.
Spurred by advice on the Reddit thread r/WallStreetBets, retail investors using online brokerages have sent previously undesirable stocks through the roof — catching both brokerages and institutional investors off guard by massive unexpected losses.
The controversy over the past two weeks has largely centered on GameStop, a video game retailer with one of the most shorted stocks on any stock exchange, when its stock shot up. Firms that rely on risky bets for big payoffs, including Melvin Capital Management, tanked. MCM’s value slid 15% in the first three weeks of the year. [ Source: Washington Examiner (Read More…) ]
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