On its official YouTube channel, the United States Securities and Exchange Commission (SEC) has released a series of short videos as part of a campaign to protect investors from the “gamification” of financial markets.
According to the SEC’s website, the “Investomania” campaign “uses a game show concept to educate investors in a fun way that investing is not a game and that they should exercise due diligence when ‘they make investment decisions’.
The videos cover topics such as “easy money”, buying stocks on margin, cryptocurrencies, and last but not least, stock memes.
Check out the latest video, which pokes fun at meme stock investors who don’t do their research before investing:
GME and AMC shareholders are furious
Although the video doesn’t mention any action in particular, it’s no exaggeration to say that it alludes to GameStop (EMG) – Get the Class A report from GameStop Corp. and AMC Entertainment (CMA) – Get the Class A report from AMC Entertainment Holdings, Inc.. These are the top meme stocks that have caught the attention of retail investors.
As a result, the video sparked a lot of anger among the GMC and AMC investor communities on social media.
These communities have previously criticized the SEC for what they see as a failure to protect them from market manipulation practices such as naked short selling, a lack of transparency with pay-per-order feeds, and dark pools.
In October 2021, the SEC released a report on GameStop’s business activity in January 2021. The report concluded that the causes of GameStop’s incredible stock price surge were:
- Frequent mentions on Reddit
- Significant mainstream media coverage
- Large volume changes
- High short interest
In the report, the SEC mentioned that it was still in the process of identifying “areas of market structure and regulatory framework for potential study and further review.” These include:
- The forces that can cause a brokerage to restrict transactions;
- Digital engagement practices and PFOF, i.e. payment for order flow;
- Negotiation in black pool;
- The dynamics of the short selling market.
Meme stocks are stocks that have gone viral on the internet, not necessarily because of their trading fundamentals, but because of investor sentiment. Like other high volatility assets, they come with huge potential risks that investors should be aware of.
The SEC should protect the markets as broadly as possible and educate retail investors to help them act as thoughtfully as possible when putting their money somewhere.
However, for many investors, the SEC campaign demonizes their favorite stocks. And, while risky, meme actions are certainly not all bad.
The phenomenon of meme stocks has shown the markets what happens when large numbers of retail investors band together and drive stocks higher. Meme stocks are also a symbol of the democratization of markets, something investors have been trying to achieve for a long time.
(Disclaimer: This is not investment advice. The author may own one or more stocks mentioned in this report. Additionally, the article may contain affiliate links These partnerships do not influence editorial content. Thank you for supporting Wall Street Memes)