Meme Stocks’ Rollercoaster Ride Catches SEC’s Eye

thebalancemoney.com:

The U.S. Securities and Exchange Commission (SEC) issued a warning on Monday to the markets amid ongoing volatility in AMC, the latest stock to be whipsawed by retail investors, including those on Reddit message boards. 

The shares of the movie theater chain company are the latest to join the ranks of the so-called “meme stocks,”— stocks that trade more on social media hype than on fundamentals. AMC stock has risen from a low of $12.18 on May 24, to a high of $72.62 on June 2, before dropping to $37.66 the very next day.

The regulator said it is keeping an eye on the markets and will take action, if necessary.

“SEC staff continues to monitor the market in light of the ongoing volatility in certain stocks to determine if there have been any disruptions of the market, manipulative trading, or other misconduct,” an SEC spokesperson said in an emailed statement. “In addition, we will act to protect retail investors if violations of federal securities laws are found.”

The warning comes on the heels of the GameStop drama earlier this year when individual investors plotted over online message boards and effectively pooled their money to drive up the price of the stock and force hedge funds out of their short positions.The stock swung wildly up and down, forcing brokers to restrict trading on GameStop and other meme stocks, andregulators to investigate. As retail traders get in on the AMC action, the SEC is better prepared this time around. 

What makes AMC’s case more interesting is that its stock soared to an all time high of $72.62 last week after CEO Adam Aron launched a shareholder benefits program for retail investors collectively holding nearly 80% of the company’s outstanding shares as of March 11, 2021.

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