But there were Wall Street bigwigs behind the GameStop action? The SEC opens an investigation

Huge twist in action regarding GameStop. With half the world cheering for the Reddit community to grind its noses on big funds and drive the company up, while the big players were about to bet downs, there is more and more evidence that the Wall Street bigwigs were pulling all the strings. American financial supervision has already started an investigation into this matter - United States Securities and Exchange Commission (SEC).

As a reminder: when the news came out that large funds were betting on drops in the GameStop share price, which began to have liquidity problems due to the pandemic, there was an uproar on the Reddit online forum. It did not end, however, as usual: complaining and reconciling with fate and the information that large capital rules the world. Small investors decided to take the matter into their own hands and, by purchasing shares, raise the price of the company's selling video games, and at the same time beat the nose of big players. And everything indicated that they succeeded. 

In September 2020, GameStop shares were traded at $ 11. However, after the Internet users' action, the price shot up and broke the barrier of USD 480 per share a week ago. Half the world kept their fingers crossed and cheered on individual investors who managed to win against the big fish. But is it really successful? During 6 sessions, the rate from the established peak fell (so far) by ... -89,51%.

GameStop stock chart (#GME), interval D1. Source: xNUMX XTB.

Big maybe more

When the first emotions subsided, the American Financial Supervision Authority (SEC) took the floor. Officials say users of the Reddit WallStreet Bets group who urged others to invest in GameStop stocks may have been influenced by the big Wall Street investors.

- Commission is looking at GameStop in terms of compliance with regulatory obligations, adequate risk disclosure and determination of fraud or manipulation - admits Allison Herran Lee, chairwoman of the SEC.

Carson Black, an American investor who has exposed stock market manipulations more than once, speaks bluntly. In the Bloomberg program, he admitted that in his opinion it was the large funds that coordinated the action. 

Michael Burry, one of the film's heroes, thinks the same "The Big Short", which made a fortune in the financial crisis of 2008. 

“Find dormant stocks, fill your pockets with them, then induce a shopping frenzy. If you think that the boom on GameStop was caused by individual investors, then you are wrong. Big money was at stake in all of this - Michael Burry outright on Twitter.

$ 700 million for a hedge fund

Anything can be said or suggested, but where is the evidence? Here you are. It is enough to check who actually earned on the increase in the share price. Reddit users who bought a few or a dozen shares? Perhaps also, but not as much as the Senvest Management fund. Thanks to the reports, we already know that in January GameStop earned ... USD 700 million on shares.

GameStop has been buying shares for four months, paying an average of $ 12 per share. Recall: in January they could be sold for $ 400. Today, fund managers say it was just one of many successful investment decisions.

- We made a risky decision to play against the market. In our opinion, we have discovered the untapped potential of GameStop in the e-commerce sector. When the growth rally started, we knew something was up, but we didn't expect how crazy the ending would be - says Richard Mashaal, fund manager of Senvest Management, in the Wall Street Journal.

Of course, there will be those who will believe it. Will American financial supervision be among them?