Bank stocks' volatility draws scrutiny for potential market manipulation: report

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State and federal authorities are looking into the possibility of market manipulation behind recent volatility in bank stocks, according to a report Thursday.

Reuters reported that the wild stock swings and increased short-selling activity for banks that have solid fundamentals, including sufficient capital, have drawn the attention of state and federal officials and regulators, who are assessing potential market manipulation.

Regional bank stocks plummeted Thursday, with PacWest Bancorp PACW , Western Alliance Bancorp WAL and Zions Bancorp ZION hit hard following a report Wednesday that PacWest was weighing a possible sale, though all three saw shares rally somewhat in after-hours trading. The sector has seen extreme volatility in recent months, following the failures of Silicon Valley Bank, Signature Bank and First Republic Bank.

Also see: Bank stocks may need to drop at least 30% before its time to worry about the economy, says study“The administration is going to closely monitor the market developments, including the short-selling pressures on healthy banks,” White House press secretary Karine Jean-Pierre said Thursday during a briefing.

In a statement Thursday, Securities and Exchange Commission Chair Gary Gensler added: “In times of increased volatility and uncertainty, the SEC is particularly focused on identifying and prosecuting any form of misconduct that might threaten investors, capital formation or the markets more broadly.”

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