* GameStop tumbles 25%, AMC other “Reddit rally” stocks drop * Clover tumbles 6.3% after Hindenburg report * U.S. regulators to meet on Thursday * Musk tweet sends Dogecoin up more than 50% (Recasts with GameStop share decline, adds Koss insider selling, Mester comments) Feb 4 (Reuters) - The slide in shares of GameStop Corp and other recent favorites of retail investors deepened on Thursday, while U.S. Treasury Secretary Janet Yellen said she needed to “understand deeply” the trading frenzy that has gripped Wall Street. A swarm of buying by amateur traders over the past two weeks sparked big moves in shares of companies that hedge funds had bet against in a confrontation some framed as a battle between Wall Street and Main Street. Many of those stocks have notched sharp declines this week: GameStop shares were down 37% in mid-day trading at $58.39 versus a peak of $483 a week ago, while AMC’s value has more than halved after two weeks of the battle that has pitched amateur traders against Wall Street institutions. Meanwhile, directors and executives at Koss Corp, another stock caught up in the trading blitz, sold at least $44 million in stock this week, according to CNBC. Koss shares were recently down 21%. Kim Forrest, chief investment officer at Bokeh Capital Partners in Pittsburgh, said retail investors burnt in the wild gyrations of the past two weeks were now likely to be more cautious in bidding up shares of companies with a high short interest. “(Retail investors) can see that this is a roller-coaster ride and not a one-way trip up, and that’s probably given them a little more pause before pushing the buy button.” Hedge funds are once again setting their sights on stocks they believe are overvalued. Health insurance startup Clover Health, which is backed by venture capitalist Chamath Palihapitiya, tumbled 9% after it was criticized in a report by Hindenburg Research. On WallStreetBets, the Reddit forum at the center of the squeeze that has hurt hedge funds and other “short” sellers, some denizens urged each other to hold the line and not sell GameStop, while others expressed frustration at the stock’s big drop. “It’s funny how everyone on here is telling others to hold but stock keeps falling meaning y’all are actually selling,” said a user with the handle the_undergroundman. “You’re getting played by your own brethren.” Set to meet on the issue on Thursday, Yellen said on ABC’s “Good Morning America” that she and financial market regulators were seeking to “understand deeply” what had happened in the frenzy before considering action. Yellen will meet with the heads of the U.S. Securities and Exchange Commission (SEC), Federal Reserve Board, Federal Reserve Bank of New York and Commodity Futures Trading Commission on Thursday to discuss the affair. Analysts say focus could fall on the online forums where mass buying of GameStop and AMC was discussed last week, and on the ever-larger role played by hedge funds in financial markets. “Any kind of market distortion by investors agreeing to cause the distortion goes against the smooth and transparent functioning of markets,” said Andrea Cicione, head of strategy at TS Lombard. “The reason this might not be covered by regulation yet is simply because it has never happened before. But now it might find its way into regulation in a more explicit way.” Cleveland Federal Reserve President Loretta Mester told CNBC that she does not see the Fed making any adjustments in reaction to the GameStop frenzy. The SEC is reviewing social media posts for signs of potential fraud, Bloomberg News reported on Wednesday. Hindenburg, which called Clover a “broken business” in the title of its report, said it had taken no short or long investment position - market code for a bet on its shares - in the company. The group added it was important investors understood the role short-sellers and their research played in financial markets. Famous as an early Facebook executive and the minority owner of the Golden State Warriors basketball team, Palihapitiya was among the tech sector billionaires who encouraged the GameStop trade last month by saying he had bought into the company’s shares. Meanwhile, Tesla Inc Chief Executive Elon Musk tweeted his support for cryptocurrency Dogecoin, sending its value surging more than 50%. Musk’s tweets about certain companies - including GameStop - and cryptocurrencies have contributed to the recent rally. Many analysts think the squeeze is probably over and broader market attention has begun to turn to the possible fallout. “The retail frenzy that provided an unusual distraction over the last couple of weeks appears to have lost momentum,” said Craig Erlam, market analyst at OANDA Europe. “A comeback tour may be planned at some point in the not-too-distant future but whether it will be as effective, we’ll have to wait and see.”