Stocks continue to decline as impact of China trade war deepens.

Democrats serving on the House Financial Services Committee are calling for regulatory agencies to launch inquiries into possible instances of insider trading and market manipulation. The lawmakers believe that such illicit activities may have occurred during the recent GameStop stock frenzy that captivated the financial world.

The GameStop saga, which unfolded in late January, saw a surge in the stock price of the video game retailer driven by retail investors organizing on social media platforms like Reddit’s WallStreetBets. This unprecedented event resulted in hedge funds losing billions of dollars as the stock price skyrocketed due to a short squeeze initiated by the retail traders.

In response to the GameStop situation, the House Financial Services Committee held a hearing to investigate the events that transpired and analyze the role of certain market participants, including hedge funds, retail investors, and trading platforms like Robinhood. During the hearing, panelists discussed issues such as market volatility, potential conflicts of interest, and the need for greater transparency in the financial markets.

Furthermore, lawmakers are concerned that some individuals may have taken advantage of non-public information to profit from the volatility in GameStop’s stock price. Insider trading, which involves trading stocks based on material, non-public information, is illegal and undermines the integrity of the financial markets. Democrats are urging regulators to thoroughly examine any evidence of insider trading and hold accountable those who may have violated securities laws.

Market manipulation is another area of focus for lawmakers, as they suspect that certain actors may have engaged in practices designed to artificially inflate or deflate stock prices. Manipulating the market for personal gain is prohibited and can have serious consequences for market stability and investor confidence. Regulators are being asked to investigate any suspicious trading activities that may have influenced the price of GameStop and other stocks caught up in the Reddit-fueled buying frenzy.

Overall, Democrats on the House Financial Services Committee are committed to ensuring that the financial markets operate fairly and transparently for all participants. By investigating potential instances of insider trading and market manipulation, regulators can uphold the rule of law and protect the integrity of the financial system. The GameStop saga serves as a reminder of the need for vigilance in monitoring market activities and holding wrongdoers accountable for their actions.