Summary List PlacementTreasury Secretary Janet Yellen said on Sunday regulators are still examining whether new policies are needed to address recent market volatility spurred by retail investors in forums like Reddit’s Wall Street Bets.
The crowd of casual investors took the stock market by storm in January by bidding up highly shorted stocks like GameStop and AMC, burning hedge funds. Accusations of market manipulation on the online forums have since drawn interest from regulators and Congress.
“We really need to look in detail to understand what happened in those stocks over the last couple of weeks,” Yellen said in an interview on CBS’ Face the Nation.
“But I would say that the core infrastructure of the markets, the plumbing, ability to trade, clearing settlement, those infrastructures performed well. But we need to make sure that investors are adequately protected, she said.
.@JanetYellen on @GameStop $GME: “We really need to look in detail to understand what happened in those stocks over the last couple of weeks.” Says while “core infrastructures” of markets “performed well…we need to make sure that investors are adequately protected” pic.twitter.com/nXsBnsPEL6 — Face The Nation (@FaceTheNation) February 7, 2021
Read more: How hedge funds are tracking Reddit posts to protect their portfolios after the Wall Street Bets crowd helped tank Melvin Capital’s short positions
Last week, the Treasury secretary met with the Federal Reserve, Commodities Futures Trading Commission, and the Securities and Exchange Commission to discuss the trend and potential wrongdoing.
“The SEC has promised to produce a report that will give us a better factual understanding of exactly what happened. And I think we shouldn’t be drawing policy conclusions until we understand what happened,” Yellen said on Sunday.
The frenzy forced some of Wall Street’s prominent hedge funds, including Citadel and Melvin Capital, to close their bearish bets against Gamestop, with hefty losses.
Read more: Robinhood makes hundreds of millions from selling customer orders. That business model is about to come into focus.
It also prompted scrutiny of no-fee stock trading apps like Robinhood, the popular platform also used by many Redditors. The House Financial Services Committee is set to meet on February 18 to discuss Robinhood’s response to the GameStop rally, including its decision to temporarily restrict trading in certain stocks.Join the conversation about this story » NOW WATCH: This incredible animation shows how deep the ocean really is