Reddit-Fueled Rallies Like GameStop’s Defy Easy Crackdown by SEC
- Enforcement cases often hinge on knowingly false statements
- Traders’ opinions about stocks are hard for agency to police
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U.S. regulators are likely to scrutinize the quadrupling of GameStop Corp.’s shares over the past two weeks, a breathtaking buying spree turbocharged by bullish touts about the video game retailer on Reddit and other online forums.
Yet for the Securities and Exchange Commission, fighting online commentary that hypes stocks is an uphill struggle, mainly because it’s hard to prove such posts are part of an illicit scheme to manipulate the market. Rather, successful enforcement cases typically hinge on the SEC showing that investors knowingly spread false information to dupe other traders into buying or selling a stock.