The Financial Services Committee is investigating how GameStop and other stocks could be propelled to dizzying heights. With concerted purchases, small investors had forced hedge funds to dissolve bets on the decline of the GameStop price, which in some cases even got them into a mess and upset the world’s stock exchanges. Silver and the crypto currency Ripple have also recently seen violent price movements on the market.
The virtual hearing entitled “Game Stopped? Who Wins and Loses When Short Sellers, Social Media, and Retail Investors Collide” will be streamed live.
The judiciary and the US government are already preoccupied with the controversy.
Robinhood and other brokers had temporarily restricted purchases of the video game provider and thus triggered outrage across party lines in the USA. Both houses of Congress have announced hearings on what is going on.
The Texas attorney general spoke of signs of collusion between hedge funds and other parties to stave off a threat to their market dominance.
The bets on price losses at GameStop have cost hedge funds dearly. Since the beginning of the year, their losses add up to 12.5 billion dollars, according to recently published data from data provider Ortex. Some funds have their backs to the wall, including Melvin Capital.
The hedge funds Point72 and Citadel had to save their partner from collapse with an injection of billions.