U.S. markets regulator suspends trading in defunct 'meme stock' (updated)
11/02/2021 16:02
(Updates with details, background throughout)
By Chris Prentice
WASHINGTON, Feb 11 (Reuters) - The U.S. Securities and
Exchange Commission (SEC) on Thursday suspended trading in
inactive Minnesota corporation SpectraScience Inc., among the
latest securities to see a surge in interest from retail
investors on social media.
The suspension comes after weeks of volatile trading of the
so-called "meme stocks" - assets which draw sudden interest from
retail investors amid discussion on social media websites.
The trend was notably led in late January by the 400% surge
in one week in share prices of struggling video game retailer
GameStop Corp GME.N on a wave of bullish commentary shared on
sites including Reddit and Twitter.
Short sellers were forced to pay up to cover their bearish
positions and investors who bought at the heights were left
suffering steep losses when crashed back down.
Since late January, some social media accounts "may be
engaged in a coordinated attempt to artificially influence"
SpectraScience's share price even though the company had not
filed any periodic reports since November 2017 or any publicly
available news, according to SEC's statement and order.
"The Commission is of the opinion that the public interest
and the protection of investors require a suspension of trading
in the securities" of SpectraScience, the SEC said.
The SEC has said it was looking into the market volatility
and Treasury Secretary Janet Yellen convened U.S. financial
markets regulators to discuss the matter. The tumult has also
drawn scrutiny from Capitol Hill and state securities
regulators.
(Reporting by Chris Prentice
Editing by Alexandra Hudson)
((christine.prentice@thomsonreuters.com; +1 (202) 843-6464;))