WASHINGTON (Pakistan Point News / Sputnik - 18th February, 2021) The US Securities and Exchange Commission (SEC) is mulling whether more transparency is needed in "short-selling," or the sale of stock an investor expects will decline in value in the future, after last month's developments involving videogame retailer GameStop, the Wall Street Journal reported.
The SEC had an opportunity 11 years ago to impose rules against short-selling but it did not do so. Now, dealing with the fallout that caused shares of GameStop to increase 1,600 percent last month before plunging, the regulator is reconsidering making that practice more transparent, the report said on Wednesday.
Lawmakers in the US House of Representatives, who will be meeting Thursday to examine the GameStop saga, plan to discuss the dearth of short-sale data, according to a memorandum issued in advance of the hearing and cited by the report.
The memorandum noted that the SEC had not completed its responsibilities under the Dodd-Frank mandate from 11 years ago that ordered firms to heighten scrutiny over short-selling.
The 2010 Dodd Frank financial overhaul law, triggered by the 2008 financial crisis, required the SEC to collect information about how much of each public company's stock has been sold short.
The SEC now must piece together data from brokerages to understand which asset managers were most vulnerable to the GameStop short squeeze, which accelerated as many smaller traders gathering on the Reddit platform and urged one another to buy the shares.
