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SEC Chair Gensler defends Reddit, GameStop investors' right to 'smash' short sellers

Dow Jones2021-09-16

'Before we had television, people did it on the radio, now we have various social media platforms,' the regulator said

Washington's top stock market cop is showing no appetite to crack down on the behavior of millions of retail investors who use forums on Reddit and other social media platforms to coordinate investment strategies, sometimes at the expense of established Wall Street short sellers.

During a Wednesday interview, CNBC's Jim Cramer asked U.S. Securities and Exchange Commission chair, Gary Gensler, whether the SEC should step in to prevent a coordinated effort by Reddit investors to "smash" short sellers who bet against popular meme stocks like GameStop Corp. $(GME)$ and AMC Entertainment Holdings Inc. $(AMC)$

"If three hedge fund members work in concert to smash a short hedge fund, the 5 million Reddit people would say that's illegal, but perhaps it shouldn't be," Cramer said. "If 5 million people decide to smash a hedge fund that's short, is that ok? What's within the bounds of what you can do to smash a short seller?"

GameStop became a popular investment on social media in part because retail investors saw the company as being unfairly attacked by short sellers who were driving down the price of a stock and risked making the company's failure a self-fulfilling prophecy.

Gensler declined to comment specifically on the GameStop situation, but defended the right of individuals to speak freely about investment opportunities and to convince fellow investors to copy their trading strategies.

Disclaimer: Investing carries risk. This is not financial advice. The above content should not be regarded as an offer, recommendation, or solicitation on acquiring or disposing of any financial products, any associated discussions, comments, or posts by author or other users should not be considered as such either. It is solely for general information purpose only, which does not consider your own investment objectives, financial situations or needs. TTM assumes no responsibility or warranty for the accuracy and completeness of the information, investors should do their own research and may seek professional advice before investing.

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Comment7

  • KamenRider
    ·2021-09-17
    Good close down subreddits, I am a Zen Ape and I will keep on buying and hodling. All the TA and DD is done we just need to sit back and wait for what is to come. ???
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  • mojojojojo
    ·2021-09-16
    What a clown
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  • oolala
    ·2021-09-16
    sure, close down the subreddits, but guess what.... we'll still be aware of the criminality that's going on because it's so OBVIOUS 
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  • Brencakes
    ·2021-09-16
    Cool
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    • Jems
      ok
      2021-09-16
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  • Jack in the Stock
    ·2021-09-16
    He had no choice ?
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  • KamenR
    ·2021-09-16
    This is so off topic, it’s not funny. The focusshouldn’t be about coordinated efforts of Reddit investors. The topics should be synthetic shares and dark pool trading. You get to interview the SEC chair and you don’t ask about critical issues? Cramer is as useless as they come. 
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    • MrTig3r
      he is there to create sensation.. not to ask the right questions..
      2021-09-16
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  • Al3x
    ·2021-09-16
    Like
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    • Sylee123
      Like
      2021-09-16
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    • Oldie
      done please like too
      2021-09-16
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