Capital markets regulation in the age of social media: an analysis of the GameStop incident under the EU Market Abuse Regulation

The capital markets are subject to an intricate, well-established regulatory framework. However, the main concepts were established in the 1930s, and it is not surprising that they are struggling when applied to conduct in social media. Using the arguably most famous GameStop incident, this chapter highlights the potential shortcomings of EU capital markets regulation (namely the Market Abuse Regulation) in anonymous social media environments. It argues that we might need to rethink the concept of the ‘reasonable investor’ in this context. Current capital markets regulation also fails to address the phenomenon of the ‘swarm’, a mostly uncoordinated cluster of social media users collaborating to effect certain market movements. The final part of the chapter will raise the question if supervisory agencies established for the capital markets are even competent and adequately funded to effectively monitor relevant behaviour in social media.