GameStop

Real talk about GameStop

By BEN WHITE and AUBREE ELIZA WEAVER

Let’s be real a minute. The SEC can express concern and the White House can say it is “monitoring” the situation. But there is no evidence at all that retail investors gathering on Reddit or Facebook or wherever else and deciding to basically screw over a bunch of hedge funds by buying up GameStop shares did anything wrong at all. Is it a strange and somewhat new phenomenon? Sure. We haven’t seen too many viral, meme-based stock rallies.

But that appears to be what this is and there is likely not a single thing regulators could or should do about it. A bunch of people on the Internet deciding to send a seemingly defunct stock on a wild rise to an insane and absolutely undeserved valuation is not a crime. It’s just a steroidal version of investing clubs gathering and deciding to all go in on a stock.

It’s weird. We grant that. And retail investors getting in late because they saw their aunt’s Facebook post will lose money. But very few hearts will bleed across America for short-sellers whose bets on GameStop’s demise are now massively underwater. Our POLITICO Nightly colleagues quizzed some securities law experts on the matter but none suggested any laws have been broke here.

Instead, they mildly suggested maybe chat rooms are an area for some new regulatory exploration. Perhaps. We’ve had wild speculation in assets since the tulip bulb days. And we will have many more. And some people will lose a bunch of money. For the moment, this group mainly includes hedge fund managers. It will eventually include late-arriving regular people. But such is life in the markets. There are no guarantees. (More below.)