WASHINGTON (Reuters) – The U.S. Securities and Exchange Commission on Friday suspended trading in more securities that have seen jumps in both prices and trading volumes since late January amid social media interest.
The SEC temporarily suspended trading of Marathon Group Corp, Affinity Beverage Group Inc, and Sylios Corp beginning on Friday and ending on March 4, the SEC said in statements published on its website.
The suspensions are the latest effort by the SEC to address soaring retail investor interest driven by conversation on social media platforms, most notably seen in a surge and subsequent plunge in share prices of GameStop Corp. Last week, the regulator suspended trading in a defunct stock.
Volatile trading in so-called “meme stocks,” assets which draw sudden interest from retail investors amid discussion on social media platforms, has left both hedge funds and retail investors nursing steep losses in recent weeks. The market tumult has drawn the scrutiny of federal and state regulators as well as U.S. lawmakers, who on Thursday grilled executives from online broker Robinhood, market maker Citadel Securities and hedge funds.
In each of three separate statements detailing Friday’s trading suspensions, the SEC said “certain social media accounts may be engaged in a coordinated attempt to artificially influence” share prices.
The SEC has been looking at the actions of any and all participants involved in the recent trading. Potential misconduct the SEC is probing, according to its acting chair, includes: market manipulation; whether retail brokers breached fair access rules by restricting buying; the role of hedge funds with short positions in the companies, including whether there was enough data and transparency around their bets; and whether the companies took advantage of the rally to raise funds.
All three securities suspended on Friday saw sudden increases in their share prices and volumes in the absence of any publicly available news, the regulator said. The SEC further cautioned brokers and other dealers to make sure they have complied with investor protection rules when trading resumes.
Reporting by Chris Prentice; editing by Jonathan Oatis