SEC’s New Chairman Fields Questions on GameStop, Archegos

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WASHINGTON—The new Securities and Exchange Commission chairman told lawmakers Thursday that regulators were scrutinizing the marriage of social media and online trading that caused wild gyrations in shares of GameStop Corp. earlier this year.

SEC Chairman Gary Gensler said Wall Street’s top regulator was studying whether to impose new restrictions on brokerage apps that use technology to nudge people to trade more stocks and other securities

In an appearance before the House Financial Services Committee, Mr. Gensler said applications that “gamify” trading—by using appealing visual graphics to reward a user’s decision to trade—might encourage frequent trading that results in worse outcomes for investors.

Mr. Gensler also said the SEC would study regulatory changes in response to the March blowup of Archegos Capital Management. Leverage-fueled bets by the unregulated family-investment vehicle of hedge-fund veteran Bill Hwang led to more than $10 billion in losses at top global banks.

House Republicans questioned Mr. Gensler on efforts the SEC may take to require more disclosure from public companies about risks related to climate change. Some Republicans say climate change may not be a significant issue for every company. Mr. Gensler said the SEC likely would propose new disclosure rules after weighing public comment it sought earlier this year.

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