Fintechs, There’s a New Cop on the Beat

thebalancemoney.com:

Gary Gensler has been on the job for just three weeks, but the new head of the Securities and Exchange Commission (SEC) has already unveiled a big agenda aimed at fintech companies, with issues ranging from recent stock market frenzies to cryptocurrency regulation on the list.

In a House Committee on Financial Services hearing Thursday to discuss the extreme volatility in certain stocks that began in late January, Gensler said the SEC is reviewing the events and expects to release a report on its findings this summer.He said the SEC is looking for any violations and would consider whether government action is necessary.

Thursday’s hearing was the third on the topic of market volatility, which drew the attention of the public and regulators alike as they watched the spectacle of certain so-called meme stocks, like GameStop and AMC, skyrocketing and then plunging repeatedly. The frenzy spread to shares of other companies, causing extreme volatility and triggering margin calls. Some brokerage firms, including Robinhood, Charles Schwab, and TD Ameritrade, were forced to restrict trading, shutting out individual investors at a time when specific stocks were making huge moves in one direction or the other.

GameStop shares, for example, spiked to $480 from $20 and then tumbled again to $40 within weeks, after traders banded together on the social media platform Reddit to create a short squeeze. They successfully forced hedge funds that were holding massive short positions in GameStop to purchase shares to cover those positions. That drove up the price of GameStop stock, but the shares then fell again as traders took profits.

The hearing on Thursday and the two previous hearings were focused on possible remedies to prevent such