Well, with both GameStop and AMC mired in the throes of a full-fledged bear market, barring the occasional short-squeeze such as the one that occurred this summer, investors have adopted a largely hands-off approach to the meme stock universe, with many patiently waiting for a more conducive macroeconomic environment to add to their bullish bets. Of course, the SEC and even Congress have been visibly discomfited by the evolving stock mania, with the U.S. House Committee on Financial Services calling on the SEC back in June to do more to “protect the markets” from similar events, taking cognizance of the “big losses” that some hedge funds suffered as a result of the periodic short squeeze in GameStop and AMC shares, which invariably then turns into a short-lived but intense gamma squeeze. However, while the SEC has only chosen to take cosmetic steps to tackle the underlying perception of “rigged markets” that fuels the mania in GameStop, AMC, and other meme stocks, it has diverted a significant portion of its resources to actively warn investors against betting on these high-beta plays. After all, who can forget the cringe-worthy 30-second video that the SEC published on meme stocks back in June 2022?
This brings us to the crux of the matter. The SEC recently responded to a request by the Twitter user @etanleibovitz18 under the Freedom of Information Act (FOIA). Apparently, the regulator spent nearly $100,000 in producing the 30-second video that was meant to deter investors from betting on meme stocks such as GameStop and AMC.
— Ethan (@etanleibovitz18) September 20, 2022 Additionally, the SEC has reportedly spent nearly $500,000 to produce an entire gamut of informational videos on crypto, margin call, and easy money – all topics that engender vibrant discussion among GameStop and AMC “apes”. This is not to say that the SEC has not taken any action against the supposed misconduct of the Wall Street players in the meme stock saga. For instance, the regulator recently slapped a $100,000 fine on TradeZero for allegedly misleading investors. As per the SEC’s findings, contrary to its stated position, TradeZero had, in fact, complied for a short time with the request by its clearing broker to halt trading in GameStop, AMC, and other meme stocks during the 2021 mania. Nonetheless, by choosing to ignore the much more serious allegations of misconduct that are continuously leveled against Wall Street bigwigs such as Citadel, the SEC has certainly not endeared itself to GameStop and AMC “apes” community. Against this backdrop, the SEC’s response to this FOIA request certainly raises a lot of questions regarding the apex financial regulator’s supposedly profligate attitude toward taxpayers’ money.
