SEC Halts Trading in 15 Stocks Because of Suspicious Social Media Activity
The SEC recently suspended trading in 15 stocks because of questionable trading and suspicious promotional activity on social media. The SEC is concerned about “whether social media accounts have been attempting to artificially increase” the share price. An SEC Enforcement official claims that the SEC “proactively monitor[s] for suspicious trading activity tied to stock promotions on social media.” The SEC said that it has recently suspended trading in nearly two dozen issuers.
It is unclear how the SEC monitors trading or what criteria it uses to suspend trading. However, it appears the GameStop incident has called down the SEC thunder. An unexpected SEC suspension has significant repercussions on issuers, traders, exchanges, investors, and advisers. We think the SEC should take a more proactive approach to regulating social media promotion and publish guidelines about what constitutes suspicious trading.