Don't hate the player, hate the GameStop (NYSE:GME) — Part two: A case of mistaken identity?

Michele Muscillo, Luke Dawson, and Ben Morris / 03 February 2021
3 min.
Worthwhile read for: Investors, Shareholders, Company directors, Board members

On Thursday, 28 January 2021, the share price and volume of GME Resources Limited (GME Resources), a small Australian mining company, rocketed. This was (presumably) on the back of the meteoric rise of GameStop Corp. (NYSE:GME) (GameStop) as discussed in Part one of our series. While GME Resources and GameStop are listed on different exchanges, they share the same three letter ticker code “GME”, no doubt giving rise to a case of mistaken identity. 

On Friday, 29 January 2021, the ASX wrote to GME Resources pursuant to ASX Listing Rule 18.7 querying the increased share price and significant increase in volume of trading in its securities. This query from ASX is colloquially referred to as a “speeding ticket”. 

ASX will generally issue such a price query letter when it detects abnormal trading in an entity’s securities. This is to ensure that ASX is satisfied that the entity is in compliance with its continuous disclosure obligations under the Listing Rules.

On that same day, GME Resources responded to the ASX confirming that:

  • it was not aware of any information that had not been announced to the market, which if known by some in the market, could explain the recent trading in its securities; and
  • it noted recent media reports concerning trading activity in GameStop in the US (which had the same GME ticker code). 

There are a number of historical examples of a similar mistaken identity culminating in a fortuitously similarly named or coded company receiving a sharp and sudden increase in investment attention, including most recently, Zoom Technologies being mistaken for Zoom Video Communications and before that, Tweeter Home Entertainment Group being mistaken for Twitter. 

The GME Resources situation has confirmed that the ASX continues to conduct various monitoring and surveillance activities to detect possible breaches of the continuous disclosure obligations of ASX-listed companies, including through the use of computer monitored trading in ASX-listed securities to identify abnormal trading. For example, a sudden and significant movement in the market price or traded volumes of an entity’s securities which cannot be explained by announcements the entity has made or by movements in the market or its sector generally. 

While on occasion the monitoring and surveillance activities of ASX may throw up a false positive, the GME case demonstrates that the ASX detection systems are operating to catch any abnormal trading. 

Stay tuned for the third part in this series of articles, which contains probably the most tenuous GameStop pun headline yet.

If you require further advice or assistance, please contact our Corporate Advisory and Governance team.

Michele Muscillo
Michele is a Partner in our Corporate practice and he has practised exclusively in corporate law for the duration of his legal career.
Luke Dawson
Senior Associate
Luke is a Senior Associate in our Corporate practice.
Ben Morris
Ben is an Associate in Corporate Advisory and Governance practice.

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