SEC Chair Gensler defends Reddit, GameStop investors’ right to ‘smash’ short sellers

During a Wednesday interview, CNBC’s Jim Cramer asked U.S. Securities and Exchange Commission chair, Gary Gensler, whether the SEC should measurement successful to forestall a coordinated effort by Reddit investors to “smash” abbreviated sellers who stake against fashionable meme stocks similar GameStop Corp. GME, +0.56% and AMC Entertainment Holdings Inc. AMC, -3.20%

“If 3 hedge money members enactment successful performance to smash a abbreviated hedge fund, the 5 cardinal Reddit radical would accidental that’s illegal, but possibly it shouldn’t be,” Cramer said. “If 5 cardinal radical determine to smash a hedge money that’s short, is that ok? What’s wrong the bounds of what you tin bash to smash a abbreviated seller?”

GameStop became a fashionable concern connected societal media successful portion due to the fact that retail investors saw the institution arsenic being unfairly attacked by abbreviated sellers who were driving down the terms of a banal and risked making the company’s nonaccomplishment a self-fulfilling prophecy.

Gensler declined to remark specifically connected the GameStop situation, but defended the close of individuals to talk freely astir concern opportunities and to person chap investors to transcript their trading strategies.

“People travel connected your amusement and they advocator either to bargain oregon merchantability a security,” Gensler said. “Before we had television, radical did it connected the radio, present we person assorted societal media platforms. That’s not lone escaped speech, but it’s portion of what makes our superior markets robust, that radical tin disagree and disagree utilizing the media of the day. But I besides deliberation we bash constabulary the markets for fraud, manipulation, for pump-and-dump schemes and the like.”