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Photo: Alessia Pierdomenico/Bloomberg via Getty Images

The SEC issued its long-awaited report on the meme stock mania, which downplayed the narrative that a "short squeeze" was the primary driver behind GameStop's historic stock moves — and shot down conspiracy theories about the event.

Why it matters: The postmortem was highly anticipated, largely because of what it could hint about what the regulator thinks should be done in wake of the saga. But the report stopped short of specific policy recommendations.

Details: The 45-page report threw cold water on theories that bubbled up online to explain trading activity in GameStop.

  • For instance, SEC staff found no evidence of hedge funds “naked shorting,” i.e. short-selling shares that hadn't been borrowed, as some online posters claimed.
  • It also ruled out the possibility that players like Citadel Securities were snapping up GameStop stock to hedge against the call options they were themselves writing.

Worth noting: The SEC said hedge funds covering their short positions — which pushes prices higher — wasn’t the main factor behind GameStop’s prolonged share price surge. Instead, the agency blamed excitement around the stock.

What they're saying: "[I]t was the positive sentiment, not [hedge funds] buying-to-cover, that sustained the weeks-long price appreciation of GameStop stock," the report says.

What to watch: The report didn't recommend specific policy changes, but said certain areas were ripe "for potential study and further consideration," like short-selling disclosures, and payment for order flow — all issues SEC Chair Gary Gensler previously flagged in appearances before Congress.

  • The report took aim at gamification in mobile trading apps: "Consideration should be given to whether gamelike features and celebratory animations ... intended to create positive feedback from trading lead investors to trade more than they would otherwise."

Between the lines: The report leaves other questions about the saga unanswered, like how the brokerages decided they would restrict trading in GameStop and other meme stocks — and if hedge funds played any role (the hedge funds say they didn't).

  • It also doesn't address activity on Reddit message boards, and whether “bad actors manipulated social media to whip up positive sentiment,” as Reuters notes.

Go deeper

How stock images can reinforce racism

Illustration: Shoshana Gordon/Axios

Stock photos surround us in digital and real life — but advertisers, stock image companies and consumers know they have a diversity problem.

Why it matters: Stock photography forms the little-noticed backdrop to our lives, and has the power to reinforce or dismantle our implicit racial biases.

Updated 14 hours ago - Sports

The potential GOAT of chess faces intriguing challenger

Illustration: Sarah Grillo/Axios

The World Chess Championship between Norway's Magnus Carlsen and Russia's Ian Nepomniachtchi began on Friday, 1,094 days after Carlsen won his fourth consecutive title.

Why it matters: During the long, COVID-fueled layoff, chess entered a new era, and with the championship finally here, the age-old game is ready for its close-up.

Department of Interior proposes raising cost of drilling on public lands

A horizontal drilling rig and a pump jack sit on federal land in Lea County, New Mexico. Photo: Callaghan O'Hare/Bloomberg via Getty Images

Oil and gas companies should pay more to drill on federal lands and waters, the Department of the Interior argued in a report released Friday, saying that the current rates were "outdated."

Driving the news: The Department of Interior report said that the federal government's oil and gas leasing and permitting program "fails to provide a fair return to taxpayers, even before factoring in the resulting climate-related costs that must be borne by taxpayers."