SEC Investigating GameStop Stock Event

Episode 1767 (03:49)

GameStop

In what looks like a revolt of the average joe against the billionaires, the stock market this week was rocked by an event organized by people on REDDIT and other social media networks to buy stock in GameStop and AMC. The stunt turned some into millionaires as the mob action made the stock rise while causing hedge funds who "shorted" the stocks to lose billions. Average people used stock apps like RobinHood to buy up shares and drive up the stock. As it stands, GameStop and AMC are now worth hundreds of times what it was just a week ago.  Although RobinHood stopped sharing those stocks within a few days, the Securities Exchange Commission is investigating what happened as market manipulation. And Congress is threatening to get involved.

Meanwhile, the regular guys are saying that Washington and social media are circling the wagons to protect the richer investors. But others are pointing out that some hedge funds used mob action to cause their competition to lose money.

What Leo finds most interesting is the larger story of how social media and the internet can be used to create a mob with a hive mind and cause major things to happen. It can also make people do crazy things ... like drive up the cost of a so-called Penny Stock and make it a Fortune 500 company. And it's got him a little worried that this won't be the only time we see such mob action. It's going to become the norm, as people use Social Media as a weapon for ganging up against those they don't agree with or like. And it could have a ripple effect.