Those who incur in market abuse could pay up to 30 million euros in fine. CNMV made it clear that it will not accept behavior like GameStop in Spain.
The Spanish National Securities Market Commission (CNMV) warned all Spain citizens that there would be 0 tolerance on the stock market to behaviors like those with the American company GameStop on Wall Street. There will be sanctions.
The authority considers this case as “a manual market manipulation,” which should go to court for penalization. CNMV explained in an article in a national newspaper that the meteoric rise in GameStop shares is “abuse” and that, according to report 302 of the Securities Market Law, it is subject to fines of amounts that could surpass the 30 million euros and a jail sentence of between 6 months to 6 years.
Today, GameStop is part of one of the most controversial and discussed topics in the financial sector of the United States and the world. The video game company was about to suffer a bankruptcy due to the coronavirus pandemic. Still, it rose from the ashes thanks to a coordinated group of Reddit users who decided to invest in it.
This action impacted several major financial companies, who held short positions on GameStop. Those companies were betting that the price would drop to generate profits, but it did not happen.
Due to the impact that this entire event has had on the US stock market, Spain does not seem willing to go through a similar situation. And it is that, at a legal level, this type of coordination to invest in a stock market already has a criminal record.
In 2002, a similar case occurred, and which CNMV also handled, when a person tried to alter the price of the company Puleva BioTech through forums on the Invertia portal. It is worth clarifying that the citizen impersonated the company’s manager, giving third parties information to invest in the firm. Authorities tracked down the case and took it to court, where it received its prosecutions due to evidence of the crime.
However, it is relevant to note that the GameStop case shows that none of the investors who bought shares in the company have broken nor violated any regulations.
Even so, members of the CNMV, such as the counselor Juan Manuel Santos-Suarez, consider that social networks play an essential role in price distortions. According to Santos-Suarez, the authority is in charge of monitoring these platforms regularly to avoid market abuse.
GameStop is an Extraordinary Episode in the Stock Market
GameStop has given much to talk about and a warning that the financial market dynamics are changing. Economic news reports have described the GameStop situation as “an attack” on funds that hold short positions.
Well-known investor Michael Blurry also described the action as “unnatural and dangerous.”Such is the alert that even large companies have begun to put restrictions on the sale of GameStop titles to stop the video game company’s rise.
By: Jenson Nuñez
