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GameStop Trading Ought To Be Halted for 30 Days, One Regulator Says

By Rhian Hunt - Jan 27, 2021 at 5:27PM

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The halt would allow the stock to "cool down," the official claims.

As the headline-making short squeeze of video game and electronics retailer GameStop Corp. (GME -4.79%) continues, one government official is calling for a month-long halt to trading of the company's shares. Barron's reports that Secretary of the Commonwealth of Massachusetts William Galvin wants a 30-day trading suspension, remarking, "small and unsophisticated investors are probably going to get hurt by this."

Galvin says the New York Stock Exchange ought to "consider simply suspending it for a month and stop trading it," and that there is "no rational basis for this run up." He offers the opinion that GameStop's current trading "needs some regulatory intervention" and an "example" needs to be made of GameStop to prevent similar occurrences.

A man in a business suit stopping a row of dominoes from falling over.

Image source: Getty Images.

Conversely, Barron's also says many small, individual investors have profited immensely from the trading, greatly changing their financial fortunes. CNBC reports more than 3 million people now use the WallStreetBets Reddit chat room, which discusses potential short squeezes, such as fashion retailer Express Inc. (EXPR 1.36%). Some say the squeeze enables regular people to profit from a system they claim the short sellers exploit by building up excessive short positions that artificially drive down share value.

Galvin claims his 30-day trading halt would protect small investors out of their depth and hints that larger players could be covertly, even illegally, manipulating the situation for their advantage. Short positions were 140% to 144% of float before the current bull run, hinting that some of them might be "naked shorts" backed illegally by nonexistent shares. Galvin remarks the shorts appear "systemic" and some could be "nefarious," and since "the little guys you describe are probably the ones most likely to get hurt" rather than the shorting hedge funds, his 30-day suspension proposal would protect small traders, not harm them.

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Stocks Mentioned

GameStop Corp. Stock Quote
GameStop Corp.
$135.21 (-4.79%) $-6.81
Express, Inc. Stock Quote
Express, Inc.
$2.23 (1.36%) $0.03

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