Along with this line of attack the regulators will also be looking at the point where discussion and stating your opinion on r/wallstreetbets crosses the line and becomes market manipulation....
From Bloomberg:
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.
The SEC hasn’t said whether there’s anything to Block’s theory, but acting chair Allison Herren Lee said in a statement earlier this week that the agency was looking at “compliance with regulatory obligations, adequate and consistent risk disclosure, and determining if any fraudulent or manipulative behavior has occurred.”
There is also mounting concern about the possibility of bot activity in Reddit’s WallStreetBets chat after a spokesperson for the forum told CBS News that there was a “large amount” of it and that some posts were being blocked by an automated moderation system.
Brad Bennett, a former enforcement chief for brokerage regulator the Financial Industry Regulatory Authority, said cases involving talking up stocks aren’t easy because they often require evidence that someone made a material misstatement of fact.
“It’s no crime to go on a website and say, ‘I think the stock’s going to go up,”’ Bennett said. “If people choose to follow you, none of that’s a violation or a crime either.”....
....MUCH MORE
