SEC suspends action in US company promoted on social media

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The SEC, the policeman of the US stock market, announced Thursday to suspend trading in the shares of an obscure inactive company, whose price rose recently on Wall Street after its promotion on social networks.

SpectraScience, a company registered in Minnesota (north), is “defaulting” in its regulatory obligations, the SEC said in a statement. For example, this company has not published its financial accounts since 2017: “Its website and telephone number do not work,” underlines the SEC.

Read also the column: After GameStop, tether, bitcoin and cryptos?

However, since the end of January, the company has been talked about on social networks: “Certain accounts on social networks have committed themselves, in a coordinated attempt, to artificially influence the price of SpectraScience Inc. shares. “

Call for caution

The financial markets authority indicates that it issued a warning to investors on January 30 to prevent them from a mishap related to information collected on social networks.

“This is a reminder that investors need to be extremely careful when it comes to investing on the basis of sudden enthusiasm for a financial product, especially on social media, and, in l ‘Occurrence, when that interest does not appear to relate to any information about the company or industry, ”said Melissa Hodgman, an SEC official.

Read more: After GameStop, should we regulate discussion forums?

The previous GameStop in the minds

The SEC decision comes shortly after the GameStop saga, the video game store chain, whose title soared in January after being promoted on the WallStreetBets forum on the Reddit platform.

An army of budding investors then ganged up against large Wall Street hedge funds that bet on the stock market collapse of GameStop and other companies with fragile financial health and declining economic models. Massive purchases of the securities of these companies had made them take off to the chagrin of several hedge funds, forced to buy back the shares at a high price in order to avoid colossal losses. GameStop, however, has given up a very large chunk of its earnings since its peak last month: its stock, which was worth $ 347.51 on January 27, is now trading around $ 51.

newsoceon.com