Investment war riles Wall Street
Retail stock brokerages restricted trading of a number of struggling companies as a financial turf war broke out between hedge funds and internet investors. The conflict started when a volunteer army of investors on social media started buying stock in the electronics retailer GameStop and driving up its share price this month. That rankled big institutions that had shorted the stock in expectation it would fall as the company foundered.
What’s the big deal? The frenzy has spread to other struggling companies such as AMC Entertainment, BlackBerry, Bed Bath and Beyond, and American Airlines. The volatility worries financiers and brokers, who say the companies’ inevitable crashes will cause painful losses. But smaller investors and some members of Congress say brokerages unfairly interfered in the marketplace to protect institutional investors by shutting out individual buyers.
Dig deeper: Listen to Nick Eicher and David Bahnsen discuss the latest economic news on the Moneybeat segment of The World and Everything in It podcast.
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