Alex Wong/Getty Images, Randy Holmes/Getty Images, Dado Ruvic/Reuters
- Treasury Secretary Janet Yellen will meet with top financial regulators this week, Reuters reported.
- The SEC, the Federal Reserve, and other regulators will look into the GameStop-Wall Street saga.
- To call the meeting, Yellen reportedly needed permission from ethics lawyers because of her hedge-fund speaking fees.
- Visit the Business section of Insider for more stories.
Janet Yellen, secretary of the US Treasury, has called a meeting of top financial regulators for this week to look into market volatility amid the GameStop trading saga, Reuters reported.
The heads of the Securities and Exchange Commission (SEC) and the Federal Reserve will reportedly attend.
But to arrange the meeting, Yellen had to get permission from ethics lawyers, Reuters reported, possibly because she has previously been paid more than $700,000 in speaking fees by hedge fund Citadel.
Day traders banded together on Reddit to bump up the prices of several stocks, most notably video-games retailer GameStop but also AMC, BlackBerry, and Nokia, after noticing that hedge funds were betting against them.
GameStop stock has gained massively in recent weeks – from below $5 late last year to a peak of more than $450 a share on Thursday. As a result, some of Wall Street’s prominent hedge funds, including Citadel, were forced to close their bearish bets against the company, with hefty losses.
As Treasury secretary, Yellen had to sign an ethics agreement that mandates written approval before she can "participate personally and substantially in any particular matter" related to the firms she's collected speaking fees from.
The Treasury said Tuesday that Yellen would meet with the heads of the SEC, the Federal Reserve, the Federal Reserve Bank of New York, and the Commodity Futures Trading Commission, without providing a date. The meeting would happen this week, possibly as early as Thursday, a Treasury official who declined to be named told Reuters.
"Secretary Yellen believes the integrity of markets is important and has asked for a discussion of recent volatility in financial markets and whether recent activities are consistent with investor protection and fair and efficient markets," a Treasury spokesperson told Reuters.
Online brokerage Robinhood responded to the stocks frenzy by restricting purchases in highly volatile stocks on Thursday, causing GameStop to drop.
The saga has led some to question the balance of power in Wall Street and ask whether the markets favor massive hedge funds over individual investors. Both lawmakers and the general public have been calling on Washington to investigate.
White House press secretary Jen Psaki said last week that Yellen was "monitoring the situation" around GameStop-related changes in the stock market.
The House Financial Services Committee (FSC) is also holding a hearing into the saga on February 18. Robinhood's CEO, Vlad Tenev, is reportedly expected to testify as part of this.
Sen. Sherrod Brown of Ohio, the incoming chairman of the Senate Banking and Housing Committee, has also said he will hold a hearing soon.