SEC Wants Clearer Risk Disclosures Amid Market Volatility

Law360 (February 9, 2021, 8:29 PM EST) -- The U.S. Securities and Exchange Commission is recommending companies bolster their disclosures when raising capital during volatile periods, advice that follows recent trading frenzies resulting in certain companies' prices shooting to dizzying heights before plunging.

The guidance, posted online Monday by the SEC's Division of Corporation Finance, comes on the heels of frenetic activity involving shares of retailer GameStop Corp. and other companies, spurred in part by social media chatter among like-minded investors on Reddit forums.

The SEC guidance doesn't mention specific examples but notes that selling shares can pose risks to investors during periods of "stock run-ups or recent divergences...

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