The U.S. Securities and Exchange Commission (SEC) on Thursday suspended trading in inactive Minnesota corporation SpectraScience Inc., among the latest securities to see a surge in interest from retail investors on social media.
The suspension comes after weeks of volatile trading of the so-called “meme stocks” - assets which draw sudden interest from retail investors amid discussion on social media websites.
The trend was notably led in late January by the 400% surge in one week in share prices of struggling video game retailer GameStop Corp on a wave of bullish commentary shared on sites including Reddit and Twitter.
Short sellers were forced to pay up to cover their bearish positions and investors who bought at the heights were left suffering steep losses when crashed back down.
Since late January, some social media accounts “may be engaged in a coordinated attempt to artificially influence” SpectraScience’s share price even though the company had not filed any periodic reports since November 2017 or any publicly available news, according to SEC’s statement and order.
“The Commission is of the opinion that the public interest and the protection of investors require a suspension of trading in the securities” of SpectraScience, the SEC said.
The SEC has said it was looking into the market volatility and Treasury Secretary Janet Yellen convened U.S. financial markets regulators to discuss the matter. The tumult has also drawn scrutiny from Capitol Hill and state securities regulators.
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