This GameStop episode may be different

investmentnews.com:

Keith Gill, aka Roaring Kitty, is reportedly under scrutiny from regulators and at risk of losing access to Etrade, following publicity earlier this week of his holding of more than $116 million in GameStop stock.

The concerns center on potential market manipulation, especially in light of the stock’s volatility since the June 2 announcement that has been attributed to Gill, according to the Wall Street Journal. In addition to Massachusetts’s securities division looking into Gill’s activities, the Securities and Exchange Commission may also be looking at options trading issues around the stock more broadly, the outlet reported.

Shortly after Gill’s post, GameStop stock doubled in price, briefly going over $40 per share before returning to about $27 as of Tuesday afternoon. That volatility hints at some of the risk for novice retail investors who may recently have become interested – or reinterested – in the stock.

“It’s an interesting sideshow, and certainly GME, since it resurged, has been one of the most active stocks on our platform,” said Steve Sosnick, chief strategist at Interactive Brokers.

This time is different from the 2021 meme-stock craze, he said.

“The original meme-stock craze did get people into investing… It was coming out of Covid. Interest rates were zero. You had stimulus checks. Many people were working from home and therefore subject to less supervision than they might otherwise been if they were in the office.

“You had an amazing bull market. Bull markets draw in new investors,” he said. “You needed something to get excited about, and the meme stock craze got people excited… There was a huge us-versus-them mentality to the whole thing.”

Now, there is a lack of short sellers like Melvin Capital to be