Categories: Invest

Legal expert discusses SEC’s role in overseeing meme stocks

Jacob Frenkel, Dickinson Wright partner and a former Senior Counsel in the SEC’s Division of Enforcement, was on CNBC earlier today to discuss the role of SEC in overseeing the meme stocks.

Earlier this year GameStop Corp. (NYSE: GME) saw extreme volatility in a frenzy fueled by Reddit forum WallStreetBets. The stock is still up almost 14 times year-to-date. Now we are seeing a similar story playout in the stock of AMC Entertainment Holdings Inc (NYSE: AMC). AMC stock is up 4.5 times over the past month.

SEC completely dropped the ball in Gamestop


Are you looking for fast-news, hot-tips and market analysis?

Sign-up for the Invezz newsletter, today.

According to Frenkel, it all boils down to the mission of the securities regulator. The SEC exists to protect investors and maintain a fair, orderly and efficient market.

While talking about the volatility in the shares of GameStop, he said:

“You had a company moving through circuit breakers time and time again. I think it was ten circuit breakers over two days. I think the SEC completely dropped the ball in Gamestop.”

He further added that in his opinion the SEC should have imposed a trading suspension. The purpose of a trading suspension is to protect public interest, protect investors a

The stock could have resumed trading right away but it would have set a precedent to deter market participants from manipulation, if there was any.

SEC’s mission is to protect all investors

Frenkel went on to say that the SEC’s mission is to protect all investors whether they are retail or institutional investors. 

“I don’t think it should be creating regulations that micromanage or micro-regulate trading. I think, on the other hand, there was a very different issue in GameStop, which hopefully the SEC is looking at, which is whether there was actual stock manipulation involved,” he said.

What about AMC?

Frenkel doesn’t think what’s happening in AMC is necessarily different from what we witnessed with GameStop and suggested that SEC has to be taking a close look at AMC.

“I think it clearly failed in its mission because in GameStop it had the opportunity to say when a company trades completely out of control, we have a stop mechanism that we can put in place,” said Frenkel

He added that it’s important from the market protection perspective for the SEC to be investigating what’s going on in the stock market and bring enforcement cases if there is a violation.

Invest in crypto, stocks, ETFs & more in minutes with our preferred broker,

eToro







7/10

67% of retail CFD accounts lose money

admin

Share
Published by
admin

Recent Posts

Is there a way for the crypto sector to avoid Bitcoin’s halving-related bear markets?

There is good reason to be afraid. Previous down markets have seen declines in excess…

2 years ago

UPS and FedEx are good dividend stocks, but which should you take?

United Parcel Service, Inc. (NYSE:UPS) and FedEx Corporation (NYSE:FDX) are two robust logistics companies. Both…

2 years ago

Bitfarms sold 3K Bitcoin as part of strategy to improve liquidity and pay debts

Canadian crypto mining firm Bitfarms sold roughly $62 million worth of Bitcoin (BTC) in June,…

2 years ago

This biotech stock is up 100% on Tuesday: here’s the catalyst

Invezz does not provide financial advice. Our aim is to simplify information about investing, enabling…

2 years ago

Japanese film studio announces the production of a series based on crypto

Noma, a Japanese film studio, has announced that it is producing three feature films that…

2 years ago

Bitcoin price taps 5-day highs as Shiba Inu leads altcoin gains

Bitcoin (BTC) saw continued strength on June 21 as Wall Street trading opened with a…

2 years ago