Securities Exchange Commission (SEC) Investigating Melvin Capital
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According to sources, SEC got from Melvin, which has mainly refunded its clients' money, a copy of its general interactions with investors, and information about what the firm revealed to clients regarding the risks of its investment plan.
SEC Inquiry In Initial Stage
Since the inquiry is still in its early stages, formal allegations of wrongdoing may not be made. According to the sources, the asset-management branch of the enforcement division in Washington, D.C., is in charge. The SEC and other criminal enforcement authorities have looked into the frantic trading in early 2021 that sent shares of GameStop Corp. and other companies skyrocketing. It was impossible to determine whether the more extensive investigations and Melvin's SEC investigation were connected.
$6.8 Billion Loss Suffered By Melvin
Melvin suffered a loss of $6.8 billion, or more than half of its assets under management, in January 2021 due to a coordinated effort by retail and other investors to attack the fund's short positions. By January, the meme-stock craze had subsided, and Melvin had received further funds from investors.
