Wells Fargo & Co. banned its advisers from recommending the stock of GameStop Corp. and AMC Entertainment Holdings Inc., whose shares have surged amid a push from online retail traders.
“As of today, Wells Fargo Advisors is not allowing solicitation of those two securities,” a spokesperson for the bank said Wednesday. Clients can still call their advisers to initiate trades in those stocks, she said.
GameStop added more than $10 billion to its market value on Wednesday alone, after surging 135%. The video-game retailer is now bigger than almost half the members of the S&P 500 index.
The rally, which appears untethered to company fundamentals, has placed short sellers in a battle with day traders who have taken to the Reddit social media platform to encourage others to follow their lead.
AMC shares more than quadrupled, wiping out all of the theater company’s pandemic losses in 2020.
The phenomenal gains have caught the attention of regulators including the Securities & Exchange Commission, which said Wednesday that it’s monitoring volatility in the options and equities markets.
CNN reported Wells Fargo’s decision earlier Wednesday.
In addition to Wells Fargo’s move, TD Ameritrade took the rare step of limiting some transactions on shares of GameStop, AMC and others. The firm said high volume may have curtailed access to its mobile app, and it urged clients to use its other platforms.
The rebate is political theater, but the healthcare cost crisis underneath it is very much an advisor problem.
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