After a mercurial period on Wall Street, during which amateur investors coalesced on social media to cash in on commodities and heavily shorted firms, public officials have called on the U.S. Securities and Exchange Commission to look into whether there was any foul play—on either side of the deal.

It’s not clear that anyone broke the law, say several Northeastern faculty and alumni who study the stock market and the economy. But the frothy week underscored the chaos in the trading world, as retail investors set their sights on a new target: silver. 

At-home investors and Reddit users took a novel approach to gaming the stock market in late January, squeezing traditional investors and hedge funds out of billions of dollars by betting on GameStop despite every indication that the brick-and-mortar retailer is circling the drain. The day traders relied heavily on brokerages such as Robinhood, an app that enables amateur investors to quickly and easily buy stocks and options from their smartphones.

When the market began fluctuating wildly, Robinhood and other brokers temporarily restricted trading on GameStop. Elected officials including U.S. Rep. Alexandria Ocasio-Cortez and U.S. Sen. Ted Cruz said that the SEC should investigate Robinhood after it banned small investors from buying GameStop stock. Others, including U.S. Sen. Elizabeth Warren, were critical of the hedge funds and private equity firms’ ability to short sell a company like GameStop to an unprecedented degree. Still others questioned whether investors on Reddit coordinated to manipulate the market.

“There are arguments of market manipulation on both sides, levied against the hedge funds that lost billions of dollars, as well as the retail traders,” says Shaswat K. Das, a 1994 graduate of the Northeastern University School of Law who was senior counsel for the SEC in the early 2000s. Das currently practices at King & Spalding, a private law firm in Washington, D.C.

“In neither case is it abundantly clear or immediately apparent that there was any securities fraud going on,” he says.

Investors are allowed to discuss the market online, Das says—adding that he hasn’t seen every comment on the site. Brokers such as Robinhood have a legitimate reason for restricting trading in order to ensure they have enough money on hand to back up the positions they’re offering, he says.

Under current SEC regulations, brokers must have a certain amount of cash on hand to insure against possible losses. When sales of GameStop stock went through the roof, Robinhood may have had to restrict those sales to keep pace with their financial capability, Das says.

“It’s just not clear that [Robinhood] engaged in any securities violations given their own regulatory obligations,” he says.

In the meantime, while SEC officials investigate, Reddit users focused on a new target: silver. Retail sites for silver were overwhelmed as demand for the commodity spiked, inspired by posts on Reddit.

The day traders likely discovered that the trading of commodities such as silver, gold, and copper is a different game, says Jeffery A. Born, finance professor and associate dean in the D’Amore-McKim School of Business.

The cost of silver rose in response to the sudden demand, but got nowhere near the surge in GameStop, as regulators moved quickly to increase the cost of a contract, essentially raising the cost of entry, Born says.

“It was the equivalent of putting a pin in the balloon,” Born says. “It didn’t burst, but it did let some of the air out slowly.”

Then a second factor helped drive down the demand for silver—one that amateur investors likely hadn’t seen coming.

“As the price of silver went sky high, grandmas and grandpas, aunts and uncles, everyone started selling their silver,” Born says. “My guess is that the people on Reddit never counted on the fact that people would start melting down tea sets and take advantage of the high price.”

All this selling flooded the market, he says, closing the gap between supply and demand.

“There was suddenly a lot of selling pressure,” Born says. “And I’m guessing kids on Reddit weren’t around back in 1979, like me, and may not have realized that there’s a lot of silver parked out there in strange places, which can suddenly come out into the marketplace.”

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