Statement of SEC Regarding Recent Market Volatility
sec.gov
sec.gov
(Sorry for the annoying repetition:) Large threads are paginated. To see all the comments, you'll need to click More at the bottom of each page, or do this sort of thing:
After the crash of 2008, I spent some time working with Dick Fuld. Yes, the former head of Lehman Brothers. Yes, the one people describe as “disgraced,” among other terms. Here’s the irony, though — Dick was one of the only people I encountered at that level of business/finance who wasn’t a scumbag. Unlike so many virtue-signaling Silicon Valley darlings, the guy behind the curtain was an honorable dude. And again, that’s a direct account from someone who has no vested interest or a book to sell or anything of that sort.
Dick and I worked closely together, one on one. After enough time, after he trusted me, I finally got to ask him about what the hell actually happened. The man had a ton of PTSD — and probably still does — but eventually it became clear that the real story was completely, utterly, unbelievably stupid.
Yes, Lehman was doing a bunch of stupid stuff, and the management under Dick were behaving like cowboys. But at the end of the day, that was the entire market at that time. What sunk Lehman was, in the end, a decision by all of the other big banks and the regulators that they’d let Lehman die because of something that might be best summarized as “lol idk sorry Dick but we’re just gonna let you go and let the Fed bail the rest of us out sorry bro lol.” Like really. That’s how it went behind those closed doors in the lairs of the lizards that control the universe. Lehman had already suffered near-death in 1994 — the world has now forgotten that Dick was the hero that saved the firm back then — and now it was to be made a sacrificial lamb for everyone else’s benefit.
Why am I telling you this story? What is the point? Well, what I am trying to say is that these supposed “adults in the room” who are so much smarter and better than the the “retail investors” are pretty much the same sort of immature, self-centered children as the other side. The difference is, they’ve got the regulators and the politicians in their pockets. So when they say “lol oops” and literally blow up the global economy to save face, nothing happens to them. But for some reason when it’s the retail guys, a moral panic ensues.
In my eyes, the Internet-connected retail investor is learning the power of what I call “massively multiplayer liquidity.” Yes, there’s some growing pains, but let’s not kill this wild new phenomenon before we learn what it can do. Because, from what I’ve seen from the other side of things, I doubt these self-styled “retards” will ever end up as depraved and corrupt as the people they’re disrupting.
Play ball, kids. And as Dick always used to say, “don’t get left with nothing other than a ham sandwich.”
Says Dick Fuld. I doubt that's true, though, because at the time Lehman was going under, they didn't know that all the other banks were going with them. Remember, the bailouts didn't come until a few weeks later when the money market funds broke the buck triggering $trillions of withdrawals in what would essentially be a financial system wide run on the bank. The regulators didn't like the idea that a failing bank should be bailed out (as they shouldn't), and they couldn't find a merger partner like they did with Bear Stearns, so they let it fail. The bailouts didn't come until they realized that the fallout from Lehman's failure would bring down the whole system. Yeah, Dick Fuld wasn't really any different than any of the CEO's that got a bailout, but to cast him as the good guy among the group is ridiculous.
As far as good and bad people, well... The senior $LARGE_CONSUMER_BANK Vice-President who told me how much he loved the profit he was making off the overdraft fees he thought were “an honest service” to his poorest customers, with a huge smile on his face, was definitely a lot more evil than Dick.
But look, if you’ve had direct experiences with a bunch of the CEOs and senior execs at these firms, feel free to provide a counter! If you’re basing things on journalist accounts, however, you’re going to be in for a surprise when you learn who pays their bills and takes them on trips...
The market is incredibly complex. If you thought that executives can foresee the downstream effects of a given market event because they are "all-knowing, all-wise", then of course you are an idiot.
But nobody you were arguing with even remotely thinks this. Of course, there is uncertainty. There was never going to be a "very orderly" draw-down, but the issues from the moral hazard of propping up Lehman were (and remain) a big consideration when considering bailouts.
What reason? Because it demystifies the room. It pulls the veil off and we get to see behind the curtain.
Strangely enough, I had a fleeting thought that this is why few firms went under and most got bailed out. I actually had this thought after watching the Big Short or another Wall Street movie about the 2008 crash. I thought that it was strange that Lehman was the odd one out and it struck me as a frat party. Only the cool kids survive.
@numair, you sound very candid and forthright. I appreciate it. I find it's difficult for people to mask their tone and reading this honest tone is refreshing. I wish you success in your endeavors.
Exactly. and that's why they went under. Let's look at all possibilities :
- Maybe Dick knew that the management under him was behaving like cowboys, and tried to stop it. Then that's sad, but so far no one seem to have given any tangible proof that this was the case.
- Maybe Dick knew the that the management under him was behaving like cowboys, and did not tried to stop it. And he got what he deserved.
- Maybe Dick just did not realize that the management under him was behaving like cowboys. Then the company he was a part of got what it deserved for putting that man - who was not competent enough to realize what was going on - in a position of power.
- Maybe Dick did not realize that the management under him was behaving like cowboys. But the "company policy" prevented him from acting. Then he should have left. You don't reach such positions without playing the game.
Maybe Lehman was not the only one doing all of that. But Lehman was definitely one. As such they maybe should not have been the only one to die, but they definitely deserved what they got. I don't buy the "I was a clueless nice guy that got caught in the middle of it" story. He's not sorry he did it, he's only sorry he got caught, otherwise he would just have left sooner.
As someone once told me when I lamented that I don't talk to a certain person more often, they stopped me and pointed out that the phone system works in both directions. There are two people not talking to each other, not just me.
Dick participated, he could have blown the whistle, and he didn't, so he deserves a share of the guilt. He is not innocent. But if you didn't build the house of cards, then it's not your fault, it's the group's fault. If you colluded to remove people who would have said something, then you get more of a share of the blame. Anyone could have blown the whistle, not just you. Even if it's obvious that you are the most likely whistleblower, there could have been others. (And if you were the most obvious, you can't anonymously tip someone off because everyone will know it's you, so you're doubly screwed.)
One of the things slimeballs have intuited for millenia is that if you really believe something crazy, nobody is going to pick up that you're lying because you believe it. You've lied to yourself, and then fastidiously avoided looking at the lie so that you can maintain your innocence, and your profit stream. You're guilty as sin, with extra sins piled on top.
We should encourage conscientious people to play more poker, I guess.
My understanding is that the GFC happened because the whole economy was levered to hell. At the risk of referencing the big short, there was a scene in that film where a stripper has levered herself up so much she owns five home. The reason the GFC happened was in reality because average people were levered up on real estate and couldn't afford their repayments.
I fully understand that the financial system also took on too much risk and many understood those risks, but the narrative that hedgefunds are entirely to blame for the GFC, and that they were the only ones being irresponsible with leverage, is surely wrong?
If the blame was with anyone it should be the regulators... Why were individuals and hedgefunds able to take so much risk? In the absent of regulation individuals and hedgefunds should be expected to take maximum risk for their own gain. Just like how WSBs did when they were all exploiting the infinite leverage glitch.
Another thing that I don't think is true here is that the government is only there for the hedgefunds... If this last year has proven anything it's that the government is perfectly wiling to bail out individuals if they feel it's necessary to save the economy. And if the financial system is so rigged against individuals then isn't it odd how those individuals seem to be so able to destroy the hedgefunds with relative ease from a free smart phone app?
I'm not trying to be edgy, I genuinely don't understand why people seem to blame hedgefunds for every inequality problem in society.
We have a culture of people not feeling the negative repercussions of "bad actions". Buying multiple homes was irresponsible, mortgage brokers immediately selling every loan is a moral hazard and Wall street levering up on CDOs were all problems. All of them deserve blame BUT the hedge funds and mortgage brokers got bailouts and the home buyers didnt. That smells like BS to me and anger at the people that allowed that to happen, hedge funds and bankers included, looks justified to me
What bail outs are you referring to? Are you talking about the TARP program? Because didn't most of that go to banks (not hedge funds) and wasn't that actually a net benefit to tax payers? I'm not asking rhetorically, I'm honestly just not that well informed on the details of the TARP program being from the UK and having not been old enough to have direct experience of the GFC.
I do agree that more should have been done to help those struggling with mortgage debt, but again it's weird to blame hedge funds for this. To blame the hedge funds you would first have to assume they planned to take down the global economy, and then secondly assume that they have some level of responsibly over the government's decision to purchase toxic assets from the banks. It was the government who took the tax payer's money and gave it to the banks.
It's also not like all hedge funds were involved in the GFC either. I guess I don't really understand what Melvin Capital did that was so bad that people now want to bankrupt the company. Being angry at certain individuals and companies for taking on the excessive risk that caused the GFC is understandable, but being angry at all hedge funds or all of "Wall Street" is silly. A lot (and I'd assume most) of these companies are perfectly responsible and acting within the law.
And to be honest it's worse than just targeting random Hedge Funds, a lot of the posts I've seen on Reddit seem to be complaining about capitalism and the financial system in the general. I think this is partly why I'm feeling the need to question what and who we're angry at here. I want to make sure we're justified when we're bankrupting these companies and making their employees redundant. A mob as big as this without a clear target should worry everyone.
If a bank falters more people are going to be upset. That's just the nature of the situation.
One of the effects is that there is no real pilot onboard anymore. Some people are dressed and talking as pilots and some of them may believe they (and their teams) understand and control, but I think most feign.
The huge 'kinetic energy' of all those systems let them roll forward more and more out-of-control, until some mishap reveals our lack of knowledge.
Ah, if that is your core question, that one is easy. Because most people can't think about so complex questions properly (or are unwilling, lazy, or haven't been taught), and they simplify the world into emotional picture, for example blame someone. Then it's just a question of finding who to blame, today a popular answer is "rich hedge funds".
https://www.politico.com/magazine/story/2019/08/02/joe-biden...
TL;DR Biden is literally bought, paid for and supported by hedge funds (as is every other politician).
This whole "you people are crazy this is fine" mentality has got to end, we are in WAY corrupt times.
I will ask you a different question: if LEH was so strong, why didn't the Koreans invest? Why didn't BARC invest before BK? The issue, again and again and as explained at massive length in several books, they had very shaky funding, they had a lot of stuff that no-one knew how to value, they insisted to everyone that this stuff was very very valuable...it was not. If the real estate was so valuable, why couldn't they sell it? Every single person who I have ever met in the same position (I have met many) is in denial...that is why they are in that position. Fuld made numerous mistakes that can be summarised as: he thought he had pocket aces, he had 72o.
Asking Dick Fuld for opinions on Dick Fuld is not smart.
Interestingly we might have another name for it - democracy went through similar growing pains as the people took power from the grown ups in the room.
Worked out mostly ok :-)
The appropriate thing to do is for the SEC to subpoena Reddit and RobinHood, correlate trades with posts to prove intent to manipulate the price (which IS illegal), and charge every individual with market manipulation.
Just like any other individuals guilty of market manipulation (Libor riggers, Navinder Sarao, etc).
Robinhood should probably also be investigated for abetting this, although it's a gray area.
The 2008 recession is not really a comparable event to the current GME short squeeze. It was rather a broad series of events, most of which were unfortunately legal, some of which were probably not.
In that case I would be in favour of charging the ratings agencies with fraud, and possibly the financial regulators with gross incompetence.
Edit: I don't see it as "big guys vs small guys". I see it as "law abiding people vs not".
So my reaction is not "its unfair to prosecute the little guy," but rather "we didnt get those criminals but at least we can get these criminals."
Is it "illegal price manipulation" even if it's done completely out in the open for everyone to see? (I'm seriously asking this question).
I feel like laws governing market manipulation imagine secret collusion among actors that one might reasonably assume are either competing with one another or pursuing their interests independently.
But in this case, the actors are entirely transparent with their motives. Anyone can go see what they're up to. Figuring out why these stocks suddenly went through the roof required no formal investigation at all, as far I know; it didn't take long to figure out why it was happening.
I also wonder whether those motives are even an issue here. Certain people in the system might be legally bound to be truthful with their clients, they might be required to pursue their clients' interests faithfully, and so forth. But isn't it true that as an individual investor, I am perfectly free to invest in stocks based on my horoscope, my initials, random throws at a dartboard, or anything else?
In other words, are the "lulz" illegal here? Is it illegal to not be "serious" with the market (whatever that means)?
Let's suppose there's a massive oil spill tomorrow. Everyone goes on reddit and says, "Hey, let's destroy this company by executing the following actions with the following securities . . ." (let's assume this is possible for a moment). Is that "market manipulation?" Is that illegal? Is that "abusive" (as the SEC puts it)? After all, in that case, they are trying to abuse the company for reasons they regard as entirely rational and reasonable, and they're doing it for all to see.
[edits for grammar and clarity]
In both cases I guess you could say "Yes." and I might agree, but I do not believe it rises to the level of illegality.
I could see the SEC looking at this, deciding that it represents collusion and should not be allowed and clawing back the "ill gotten" gains.
Blockchain based settlement anyone?
Anyone who told others to buy and hold with promises of short covering and higher prices is party to market manipulation, and it is absolutely, definitely illegal. Whether they'll be able to unmask and charge people behind the anonymity of WSB is another question though.
A good lawyer can argue that these people are exercising their first amendment right of free speech. They are not reporting false data and most of these people commenting have "average" net worth not millions/billions.
Its also very hard to prove to a jury that a message from such an average joe on a message board is enough to form a "scheme" with million other readers on wsb.
And, anyone who bought shares or told someone to buy shares with the intent of driving up the price also did something illegal - but it's something that is done constantly and considered a fundamental part of the market, either as an attack on a company in the classic hedge fund short->bankruptcy or, more benignly, like buying up shares of a takeover target slowly so people don't notice you are interested and buy it, which would raise the price.
Seriously, market manipulation goes on all the time at grandiose scales and at small scales. This time, it's probably a handful of people who had critical mass and the mass is following suit.
If you analyze and act on a market based on an analysis, you are manipulating the market, period. HFT for example happens at time scales never conceived before and are almost undoubtedly market manipulation. The only way not to manipulate the market is to not interact with it.
It really becomes this arbitrary pointing game where subjectivity is thrown into play and favors are called as to who is or isn't breaking the rules. Yes, there are some more established less arbitrary examples of manipulation strategies, but if anyone thinks for a second these are the limit of options available to manipulate investor perceptions, they're naive.
And to spin this further, in the world of growing disinformation or selective information herding campaigns by foreign governments and political organizations swaying elections in the US, how do you deal with those sorts of targeted campaign strategies that are almost undoubtedly, in my opinion, used to manipulate markets as well?
If we can't pinpoint actors threatening the fundamental security of our nation, how do we hope to deal with this in regulating financial systems where blatant abuse is left to pass already.
Bank analysts are constantly putting out "ratings" on stocks, price targets, etc. Articles all over the internet and tv are saying to buy this stock or that.
What I find strange is that if all the WSB subreddit just put their money into their own wsb-fund that just bought up all the heavy shorted stocks and did exactly the same thing, they'd call the fund manager a genius.
Market manipulation and pump and dump schemes should refer to the spread of dishonest information in order to move a stock price. But things like short-interest is a public number and the hedge funds self-admitted to being short these stocks--it's not like they went around saying "I got a secret tip that a hedge fund is very short this stock, let's buy it".
Shouldn't it be obvious that just taking the opposite trade to a hedge fund can't be market manipulation, unless taking the same side as a hedge fund would also be market manipulation?
If that were true the hedge funds that shorted GME and then released their reports on why they thought it was going to go down would have been operating illegally already.
Or, more generally, any CEO making public statements about their company performance.
Pretty sure you need some extra spice to make it illegal, such as falsifying information.
I thought everyone knew this? It was an open secret that former GS CEO and Sec. Treasury Hank Paulson threw Lehman under the bus only because he was tight with Blankfein and was on bad terms with Fuld. Not to mention, Lehman was a much smaller sonofabitch challenging all the big banks.
Of course, I'd like to both as you personally and additionally air out a sentiment of the ease of access being delivered to retail investors. What was once prohibitive has now been given to the individual. Do you have any sentiments that you're willing to share on that notion?
As an additional thought; personally, I can't believe the behavior of some of the brokers that have come to light recently. RobinHood who, as they said in a tweet in 2016 "let the people invest" and now, in 2021 we see how true they maintain their values by restricting the very same people they sought to empower by disallowing trading on their platform. It is despicable.
But they sure would like to be. I've seen WSB. The entire system is selecting for sociopoaths.
The only two i-banks that got help from the Fed were Morgan and Goldman, and they only got it by converting to commercial bank holding companies first. So really, no i-banks got help from the Fed.
- The contributions from the various institutions were as follows:
- $300 million: Bankers Trust, Barclays, Chase, Credit Suisse First Boston, Deutsche Bank, Goldman Sachs, Merrill Lynch, J.P.Morgan, Morgan Stanley, Salomon Smith Barney, UBS
- $125 million: Société Générale
- $100 million: Paribas and Lehman Brothers
- Bear Stearns and Crédit Agricole declined to participate.
https://en.wikipedia.org/wiki/Long-Term_Capital_Management#1...
when I refused to go along they turned me into a scapegoat. THIS is why I had to do what I had to do.
Absolutely.
Dick and Trump are examples of scapegoats. Throw someone under the bus publicly, so you can continue doing what you're doing while the public is busy staring at the spectacle.
Right now it appears that the public wants to be able to trade on their terms because there is this narrative that the little guy is finally sticking it to the big bad hedge funds. In reality there is probably very little truth to this. However, support for the individual investor plays extremely well which is why you see politicians from both sides joining forces on this issue. A rumor makes it halfway around the world while the truth is still putting its pants on. Nobody is interested in the subtleties around these issues where there almost certainly should be regulations in place or at least warnings from those who do actually know better. But late in bull markets when speculation is running wild those who try to be the voice of reason are run over by the masses until they shut up and go away.
Galbraith wrote about this in the 1950’s and if you read his account of the 1929 crash the parallels are eerily similar. Nobody wants to be told they aren’t making money due to skill but because they’re caught up in a dangerous bubble. In the aftermath of a crash when tremendous sums are lost, nobody blames the speculators, they always find another scapegoat- the regulators, the brokerages, the hedge funds- whomever. It doesn’t matter so long as the speculator is held up as a victim. I expect this to end no differently.
There's a hurried rush of small investors hoping to turn their meagre savings into a big win, backed by the anxiety that if they don't try then they'll forever regret missing their one and only chance at a comfortable life.
This sort of event would be less likely if America's wealth disparity weren't so grotesquely skewed.
What's funny is how the HN community tries to defend the firms they've whined about for years. Is what's going on irrational? Yup. But it pulls back the curtain of what the financial firms do to the economy and their own manipulation tactics.
It is FOMO for sure, but the real emotions I get from talking with people are outrage and revenge. Everyone feels like the system (economic and political) is rigged against the public. The dopamine hit from sticking it to the man is palpable.
The overwhelming majority of examples I have seen so far are only concerned with causing hedges funds to collapse and to put brokers out of business, personal losses be damned.
And I see little reason to doubt this. Everyone knows Gamestop is a company with an obsolete business model, a bad reputation and little chance of turning things around. Everyone knows that there is little to no chance of making any money on holding. But $500 isn't a lot of money. 3 million people each putting $500 in to GME is. Obviously there are some who are putting in far more. Current market cap is $24 billion. Its coming from somewhere. I suspect once this is all over we will find that some major players got involved as well and put a lot of money into GME to topple their rivals. But that isn't the main narrative and most of the people buying in are doing so to make a statement.
This has started a discussion. A lot of people are getting a 101 education on how the stock market really works and they are learning just how little it actually has to do with real value and the economy. I predict there will be serious public pressure for regulatory reform. People are going to want to make shorting and high speed trading illegal.
Let's say instead of buying a Latte every working days at starbucks over the last five years you had invested it in tesla stocks. Or maybe for every starbucks latte you drank, you invested the same amount in ETF and in Tesla (pay 3 latte, drink one). Where would your life be? Would you still be at your 9-to-5 or would you go work for that non-profit? Or would you just be lazing around on the sofa or at the beach sipping pina-coladas?
Anyway, sometimes it takes a lot of energy to deal with the KIMO (Know I Missed Out).
Highly unlikely. It doesn’t matter how rich the rich are if you’re poor and want to gamble your way out. The problem is with poverty, which is completely unrelated to wealth disparity.
One you can fix by making life worse for everyone, the other you can fix by making life better for the poor.
Maybe, but I'm pretty well off (at least compared to the rest of the country) and I still feel the same way. It's primal if you ask me.
RoaringKitty found the stock underpriced in 2019 and then managed to turn 50k into 13M in 1.5 years + and is still holding 22M in stock and calls.
I disagree. I think a big part of why this whole thing is fascinating is the depth. Yesterday morning, financial press were blathering generalities pinning WSB as market manipulators and calling for regulation to stop them. That is, stop retail investors trading at a scale that moves markets. IE, the stuff that insiders get away with regularly.
Between yesterday afternoon and now, millions of people have been catching up on the detailed mechanics of stock trade execution. There's a mad dash from reporter to get interviews with brokers, clearing house operators & such.
Note that the maneuver itself was analyzed in detail, and in public. That's what allowed big names like Cuban, Musk, various politicians and such to take a side and comment on it intelligibly.
Ultimately, whoever is holding these meme stock shorts needs to buys stock to cover their positions. I acknowledge that brokers had legitimate/legal/normative reasons to stop retail buys. But, it's also true that they created a window where short sellers could buy without competition from retail investors. Maybe brokers are covered legally against market manipulation charges because clearing houses were genuinely short on liquidity. But, (1) that doesn't change what happened and (2) Isn't this the regulator's job?
The reason people are cheerleading is because of these shenanigans. "Rigged" gets thrown around often, usually it's devoid of subtlety. This time, it's detailed. We can debate the details and construction of the rig. Truths fly around reddit for an afternoon, and are discarded the following day.
Few people cheerleading because they want a no regulation, pre-depression stock market. They just aren't willing to accept a rigged system. In any case, who are the speculators here? Short sellers like Melvin or Redditors? Short sellers future-sold 140% of the stock... hoping for a crash and potentially creating one. Redditors recognized this by looking at publicly available information and discussing it in the open.
Of course not. Immediately a false narrative was created that citadel forced them to do it under threat that they would stop their order flow. Had any politician or public figure merely suggested we let the CEO of Robinhood explain the decision, they would’ve been dragged by the Twitter mob. Just look at how Steve Cohen, Lee Cooperman and John Fortt were shamed for raising what I believed to be perfectly legitimate questions. But nobody is interested in legitimate questions when it’s hive mind mob rule which is what always takes hold in a bubble. In fact the vilification of naysayers is one of the tell tale signs of a speculative bubble.
To answer the last question who are the speculators here, shorts or wsbers? Both. But what I’m talking about are the speculators who are simply buying this up with the expectation they will make huge gains like deep fucking value. They can say all they want about how they don’t care about potential losses and this is something bigger. Total nonsense. Let’s see who gets blamed and who plays the victim if we get a crash.
It’s an interesting world when Mark Cuban and chamath palyhapitia can be portrayed as champions of the little guy when they have made billions of dollars at their expense. Chamath takes a SPAC public every Tuesday. Who do we think are buying these up? Warren Buffett? Didn’t Cuban make his fortune selling a worthless business to Yahoo? These guys are using this entire thing to build their own popularity.
Is the regulator in this case the SEC, the exchange, or some other party?
Who do they think is selling counter party is?
All they’ve managed to do transfer wealth from one hedge fund to another. And eventually when this pops they have transferred wealth from themselves to other winning hedge funds.
Which part has little truth to it?
The big hedge funds are apparently losing money (billions!) on Gamestop, unless that's being mis-reported. Some of the "little guys" (reddit people) definitely were a part of the reason for that.
A few hedge funds (of different sizes) are indeed losing billions. A few other hedge funds have taken the opposite side of this bet and are making money. The vast majority of hedge funds have no position in this stock and are completely unaffected.
In addition a bunch of HFT shops and similar making a lot money off the volatility and order flow all this has caused.
https://www.google.com/amp/s/www.marketwatch.com/amp/story/l...
A Korean fund made a billion dollars on a 12 million dollar GmE investment and they were only the 7th largest holder of GME shares. The wsb narrative of this sticking it to Wall Street is just false.
I personally think it’s a narrative propped up intentionally by wsb insiders for their own gain. This is just a modern distributed boiler room. Retail traders always pay in those scenarios.
Some are losing money. But that is nothing new. Hedge funds die every day ... on paper. But which brokerage houses are going under? Other hedge funds are doing fine, likely profiting on this. The fact that a few are held out as victims sounds, to me, like the other funds just stoking the panic. I don't see any non-paper houses closing over this. This is Gamestop, not the mortgage crisis.
There are thousands of hedge funds, just because a handful have been caught with their trousers round their ankles doesn’t mean the others aren’t profiting from current volatility.
It seems like they've all closed their shorts already, most of them did on like day 2 I believe.
In addition, other hedge funds have been on the winning side of this trade. Some of the orders for GME last few days have been absolutely massive, not coming from retail.
This whole thing is disgusting. Once the euphoria had subsided, people will realize that the hedge funds have come out as bandits, having traded nickles for dollar bills.
Which ones? Citadel/Melvin/Citron (is this all the same one?) and which others?
Money is lost when a retail investor holds onto their shares not just when the stock price rises.
It seems like the big money is changing its clothes to pose as children in order to get priority on the life boats ("Women and children first!").
The social circle of firms closely connected to this ruin of Robinhood and which had been short GME are the speculators. Short for longer than intraday == speculative. Short as a market maker for an hour or two is good for efficient clearing.
It's on the guys with the big money to gather their fortitude and ride this out in the most-trust-inducing ways they can. I think the big money is naive if they think it could be otherwise.
One more thing, I am reminded that a lot of the time, a retail investor will buy something, a weak stock, and ride it down to zero out of misguided optimism. Conducting margin calls on zero notice is going to be toxic to such people and I don't think the finance world really wants that money to leave the market for good.
At the same time I keep hearing that the stock market is actually undervalued on average given current interest rates - and those aren't going to change anytime soon.
Definitely things are frothy and there are bubbles in some stocks, but maybe this market still has legs - at least while the fed is buying 120 billion of debt each month.
[1] I found it, it was Joe Kennedy in 1929: https://archive.fortune.com/magazines/fortune/fortune_archiv...
The whole premise of your argument is based on ‘probably’
The hedge funds are the speculators in this case. They're playing a dangerous game where you can short more stock than what actually exists. Why this is allowed? Who the fuck knows.
In other words, this works simply because stocks can be sold and borrowed, and they don't carry provenance with them. To stop this, you'd have to do the equivalent of DRMing books and revoking the first sale doctrine. Which I imagine would turn shorting into a much more complex market mechanic than it is today.
(Disclaimer: the extent of my expertise on stock markets is me knowing how to spell "stonks".)
Imagine you short 50% of the outstanding shares.
Now there are 50% more long positions than outstanding shares.
It's not substantially different from having 100% or 150% more long positions than outstanding shares.
That’s where we ended up after 1929, until the current billionaire class removed all the guard rails.
Nobody deep on SV stocks and unicorn chasing wants to admit they’re in the bubble too. Why does society owe floating a coder bros data science project?
Anything not science is a meme. That billionaires should exist is a meme. This is social philosophy, not truth. And it’s gamed.
America is a bubble in time and it’s having a real (environmental) impact on the future.
Billionaires are not experts. They’re rich and can pay the fines and schmooze. That is not expertise. It’s selling “free market” and manipulating it based on a meme that speculative finance expertise is real. All it is is social engineering of the masses to accept deflation of their economic position.
The fact that buying was limited yesterday is evidence that the little guy is actually winning here.
Trading was stopped to save the hedge funds, because if they go under or lose too much, the clearinghouse has to front that. If the clearinghouse goes under the whole market will crash.
As has been explained in multiple other places, the limitations were as a result of Robinhood et. al. being unable to cover the risks involved in providing instant trading capabilities for a stock as volatile as the ones that got restricted. That has nothing to do with "the little guy is winning" whatsoever, and in fact may indicate that "the little guy" is about to lose his shirt, due to lack of predictability.
Trading was not stopped "to save the hedge funds". This is an outright lie that needs to be squashed. Stop saying this. I don't mean to be rude, but the narrative you're spreading is actively dangerous and not supported by any of the facts we have available to us.
Once one accepts that "socialized risk and private profits" isn't acceptable, then one must also accept that either we must allow even the too big to fail actors to fail, or we must not accept any actor to be too big to fail at all.
If public money is used to rescue a bank or clearinghouse, then the public should own it. A government institution can buy any failing bank/clearing house/ if it's so vital, and then the public owns it. Buying a commercial bank or clearing house at cents for the dollar and then selling it again in better times isn't necessarily a bad idea. It's certainly a better idea in terms of moral hazard than simply "bailing out" banks without ownership.
This should scare the crap out of Robinhood from what happened yesterday.
They clearly violated their customers' trust, so their customers should leave them.
And I will be completely unsurprised if when the dust settles it turns out they acted illegally.
Also, they suck at lying.
They did? That might be the case according to the Popular Narrative (that the Hedge Funds phoned them and said "shut it down"), but reality is that they couldn't front the deposits for the customer's trades, due to the insane volatility. In that case it's less violating their customers' trust and more having a product that couldn't handle extreme circumstances well. They are a discount brokerage after all, some compromises had to be made.
Is that aimed at "professional hedge funds" or self-proclaimed "autists" in an internet forum?
It failed mind you. The shorts are still bleeding and the GME hold is continuing though just at a slightly reduced price.
Retail investors who have bought GME can afford to wait out the antics of hedge funds, but those funds are on borrowed time to try to turn the loss of a century into some kind of win, or they are done for good. Ask yourself, who do you think is trailing the borders of legality? A teen who goes “hmm GME at 100$? Sure why not, I’ll take 10” or the hedgefond manager calling all his friends to stop trading because his fund is going bankrupt on a stupid bet he made that he would have gotten away with if it wasn’t for those meddling kids.
People like you make fun of the QAnon-types but you're just as willing to indulge in deranged evidence-free conspiracy theorizing as long as it accommodates your ideological priors.
That's clearly not about random people commenting on an internet forum.
It may still be about specific people commenting on an internet forum, but those people would know it's about them.
Given the track record of holding the powerful accountable is terrible, I don’t think this is directed at hedge funds but is a warning to the little people.
It's clear that everyone should be lawyering up depending on what positions they had when they started pumping this idea to the masses. That said, I'm a big believer in "a fool and his money". If there are hedge funds or retail investors out there who, perhaps, didn't understand all the risks of what they were doing, protecting them from their folly only causes more problems in the future.
As horrible as this sounds, now is the time to let everyone fail. Hard. If we don't, no lessons will be learned.
They made a few thousand dollars and got months in jail for it.
The problem with wsb is that it has gotten so big and there are too many involved at this point.
1. For lying about that reason to customers
2. for not shutting down all trading on their app (allowing sells of GME without manipulated the market, even if blocking sells would also have bad effects)
3. For allegedly tipping off Citadel before shutting off GME trading (unconfirmed but they will likely investigate this claim)
But many people seem to think that the SEC will punish them simply because they stopped allowing people to buy more GME.
"Big fish" were still able to get an account manager to process their trades while the button buy was disabled for everything else.
There's also a seeming conflict of interest with Citadel's involvement in both RH and Melvin.
Those who are anti-WSB thinks it a warning to WSB.
WSB isn't regulated, that is companies like Robinhood
Specifically calls out retail investors (i.e. WSB). I read it the opposite way, but I can see how it could be interpreted as a warning to both.
Good on the SEC for stating they stand with retail investors, even if it ends up being hollow it sure is nice to hear them say it.
this is all hypothetical, which is why I used the word if. If they did what WSB is accussing them of, which I think is probably doubtful, RH is in really really big trouble...
It is possible for one group of retail (lets say the original WSBs crowd) to take illegal action that harms other retail investors.
Taking action to protect the mass of retail does not mean that all of retail is immediately in the clear.
> In addition, we will act to protect retail investors when the facts demonstrate abusive or manipulative trading activity that is prohibited by the federal securities laws. Market participants should be careful to avoid such activity.
"Market participants" here is referring to retail traders. Don't make the mistake of thinking that just because you're the little guy, you're exempt from the law. It's like how the capitol rioters were sure they were on the side of America but the FBI (and half of America) sees things very differently.
A lot of government regulation is about protecting the little guy from other slightly more unscrupulous little guys. "The public" is not a monolithic entity - folks can and do screw each other over even when purporting to be part of the same mass movement.
Is going on CNBC and talking about the strength of a company that you invested in market manipulation? Before this blew up you certainly had more reach.
Is posting "research" or holding a conference call and telling people a company is garbage while you have the company shorted market manipulation? What about when you short a company and sell a ton of shares to induce panic? What about algorithms that are created to trade shares to reach a certain profitable price based on internal holdings/analysis?
Here's another thing - if WallStreetBets was incorporated into a hedge fund and took a huge long position is that market manipulation? It seems to me the main difference is that they aren't behind closed doors talking privately in a legal fiction called a company that is really the problem here...
You have to define what you mean by manipulating the market and apply that equally under the eyes of the law. The fact that this was done publicly makes it all the more interesting. Had it been done behind closed doors (like so many things are on Wall Street) it would have been an open and shut case, but it wasn't.
So sure, let's say it's a market manipulation event. Ok. Can you tell me what isn't a market manipulation event?
Then prevent people from buying stocks in groups. Mutual funds, ETFs, etc... all of these abstractions on abstractions, we can throw them away. The more abstractions we throw away, the closer we get to what all this should actually be meant to serve; people.
https://www.sec.gov/files/Market%20Manipulations%20and%20Cas...
The idea that there has to be behind the scenes coordination (i.e., non-publically available communication/information) runs pretty clearly through all of them, but IANASEC
Strange question, what's the bar for market manipulation? For example if a company took out debt to buy their own stock in order to drive up the price would that count?
[1]https://www.bloomberg.com/opinion/articles/2021-01-26/will-w...
And required the coordination of a 18th century war to pull off. It's one thing if this was "led" by an individual, organization, etc. but it wasn't. It was the wisdom of the crowds who played by the very same rules that the hedge funds play.
> You might decide that this kind of manipulation is OK due to it's stated goals
Where did every stock holder publicly state their case? If Jim Cramer says "i think you should buy AAPL" and everyone does it, is that manipulation?
> How can there be any question about it?
Easy. If it were illegal, who would prosecute?
I understand that if someone publicly give you a financial strategy that is sound and it is not based on a ponzi then it is a recommendation.
On the other hand, in these discussions I have seen a bunch of assertions that what the shorting hedge funds or HFTs are doing is "market manipulation" - now that is an attempt to redefine market manipulation to something entirely different than what it is/was.
Just add gig work to anything and rules no longer apply.
We're in a situation where playing in the market is a better strategy than using the market for its legacy purposes (you know, buying partial ownership in companies) and the number of financial tools created specifically to exploit the ability of wealth to generate additional wealth vastly out match everything else.
Anyway I've got paperhands and bailed on my positions days ago by following some old WSB advice that's actually worth while - "take your profits when you want to"
Assuming they're being honest - and I see no reason to doubt it - it's refreshing, compared to Robin Hood's communications, and more importantly it highlights your point. The "backend" of the market seems way more coupled than I imagined it is.
--
[0] - https://twitter.com/freetrade/status/1355161107699273729
[1] - https://old.reddit.com/r/wallstreetbets/comments/l7u3ag/free...
Exactly. Overlay this on the backdrop of a frothy, juiced up market and a bunch of angry people on their phones (I bought a few GME out of spite at $360 after considering it way back at $15)... one little push could cause the market to throw a rod, I feel. These people run the system at max RPM with minimal oil as it is.
Nota bene: I do hold some Nokia stocks, but it is from (Nasdaq) Helsinki and not from NYSE and it was already in my possesion waay before these brouhaha. I don't hold any other stocks that were affected, including stocks for GameStop.
Anything can happen, but in finance terms, this is tiny so far.
Barely more than zero because there are market circuit breakers now and broker dealers are supposed to be limiting order flow so that HFTs can't be submitting huge numbers of orders that are massively far away from what the security is trading at. Of course some broker dealers play much faster and looser than others but if shit really hits the fan the circuit breaker catches it.
However for the broader market; GME and friends are tiny.
Ristricting trading is a way of managing risk.
So when the low probability event actually happens, should I be happy to have had my trading privileges revoked and my risk managed for me?
But if they are stopped from doing that, then it certainly could happen. I think the odds are greater then most might give it credit.
If GameStop management was thinking of selling some shares to the public (or directly to those who really need shares to cover their shorts) at some crazy price they'll have to be careful.
AMC was lucky to have a lot of convertible debt outstanding which has been converted without any action on their part.
It's not the SEC's role to protect investors from risk or losses, rapid or otherwise, and saying that the recent activity "undermines confidence" is just another way of saying "increases risk", which is not their job. They should ensure confidence by guarding against fraud, but not to protect against losses by institutions that never thought that activist investors would work against their own interests.
This isn't really manipulation that we're seeing: it's people betting against the institutions that themselves bet against companies combined with a fair bit of FOMO.
The SEC came into existence because retail investors lost huge amounts of money in the 20's in speculative bubbles. The same thing is going to happen here so the SEC is literally doing what it was set up to do.
I said it's not their role to protect investors from loss. Clearly it has a role in protecting investors by requiring disclosures that allow informed decision making, policing fraud, etc.
Well, it has also the potential to expose investors to rapid gains. ¯\_(ツ)_/¯
> In addition, we will act to protect retail investors when the facts demonstrate abusive or manipulative trading activity that is prohibited by the federal securities laws. Market participants should be careful to avoid such activity. Likewise, issuers must ensure compliance with the federal securities laws for any contemplated offers or sales of their own securities.
I'm no stock player, so I may not be reading the implied meaning correctly. But on the face of it, it seems at least as recognizing WSB-driven buyers as valid players in this match.
(However, it's an open question whether they consider WSB's attempt at short squeeze as an organic thing, or a coordinated stock manipulation. The latter, as I understand it, is strictly illegal.)
It's a giant government body that overseas a very large tender market of money, they can't just make rash decisions. They need to review, see how it plays out in the longer term, and see how the government is going to want to adjust.
I don't think technically anything (minus the robinhood/other people restricting buying, and even that who knows) that's going on is really "wrong-doing" on the surface. Everything seems to be by the book.
So they'll need to dig deep into the stock and find evidence and provide that evidence to the body that reviews stuff.
You probably won't hear of any changes for months if not years if at all.
"In addition, we will act to protect retail investors when the facts demonstrate abusive or manipulative trading activity that is prohibited by the federal securities laws. Market participants should be careful to avoid such activity."
I don't think shorting stocks (even to 140% of its float) is a bad thing. And, the hedge fund managers that shorted GME don't deserve to be bankrupt.
Shorting stocks, in general, is a beneficial action for the market because it helps prevent shares from becoming overvalued.
The problem that GME highlighted is that it's too easy to purposefully trigger a short squeeze.
One possible solution seems to be that the SEC should make it easier to borrow shares to short a stock. And, in so doing, they should make it harder to purposefully trigger a short squeeze.
There's nothing wrong with greed if it doesn't hurt others...The SEC's ultimate goal should be to have a fair and efficiently priced market at all times. In this case, it seems like the party that needs to be protected is the hedge funds....What am I missing?
To me this seems:
A) remarkably hands-off, patient. “The market seems to be working.”
B) A reminder to newbies that there ARE laws, so don’t be stupid as your investing journey continues.
C) If anyone should be on the edge of their seats it’s regulated entities who may have manipulated markets by putting their thumb on the scales.
Most of the retail investors couldn't buy specific stocks on most exchanges for some time (tastytrade, ib, rh etc). I wouldn't call that "resilient".
Regardless, the prominence of the note was strange and set an immediate defensive tone.
What made it really odd was the arc of tone to "Market participants should be careful to avoid such activity." An elegant threat.
what?
The funds short the stock gain wealth from the stock price declining.
Holders of the stock lose wealth. Clients who want to buy "lose" the opportunity to gain wealth.
The suspension of the ability to buy into the hype absolutely hurt the long folks (mostly retail WSB types) and helped the short folks (the big hedge funds which are short GME).
These are mostly 19th century tricks. That's when finance and newspapers got big enough to make them work at scale. The SEC was established after the 1929 bubble got so big it took down the whole country.
Meanwhile, the latest thing on Reddit is pumping Dogecoin.
In all these things, the people who get in late and don't get out early are the losers. It's zero-sum, after all.
When a startup seeking a C round does it, it's -disruption - moving fast and breaking things - seizing market advantage by nimbly circumventing slow-moving or antiquated regulation.
When a nihilistic stan does it, it's - <various pejoratives> - <motivated by ignorance or abuse or amorality of various types>
Argumentation over terminology, expertise, etc., is secondary,
to the ways in which this is about power, which informs every aspect of how, why, who, and what. Including the language used and appeals made by those who have it, traditionally have it, and defend it, against those who do not.
Many of the details being argued over are interesting mostly because argument over such details is another tool of the powerful.
When a big hedge fund is selling a stock short, they can do so without even borrowing it. As a result, the buyer ends up not owning it and the stock fails to deliver - called a fail.
There are a lot of easy penalities that could be applied here. Reprice based on lowest price in intervening period prior to deliver. Provide a 10% rebate per day if not delivered T+3, up to perhaps a 200% rebate. Etc.
But instead, nothing happens, the fail to deliver just continues. I took a look at Gamestop on the fail to deliver list. It's been there forever.
I don't trade, but the whole fail to deliver game seems rotten.
As more platforms like ploygon.io, alpaca.markets emerge as well as more DeFi stuff gaining tractions, I really hope in the next 10 years regulations, etc, in the financial space would leave more rooms for smaller players to thrive.
Hopeful sentences for the ones who long GME. How often does the initial statement SEC makes actually matter?
Isn't that the definition of extreme stock volatility? Extreme height volatility has the potential to expose you to severe falls.
> extreme stock price volatility has the potential to ... undermine market confidence.
Confidence in what, exactly?
> As always, the Commission will work to protect investors, to maintain fair ... markets,
I don't see what's fair about the stock market.
For example, its easy to understand utility of food, cloths, car, house, money. But I am not able to find a reason about stock market existence for day-to-day trading, where secondary stocks are traded daily after IPO. It seems none of the day-to-day trading money/profit ever goes back to business to help them to improve that business.
Secondary markets also provide important capital allocation benefits. They make it easier for good companies to raise additional capital (e.g. via a rights issue) or buy other businesses (using their shares). They also provide an important benchmarking role allowing non-listed companies to price transactions on the basis of listed company valuations.
1. Reads a technical document outside their domain.
2. Feels dumb because they don't have a grasp on any of the concepts.
3. Too busy to use the very internet which some of them probably helped build to magically render learning materials to the screen in front of them at zero marginal cost.
4. Sees the word "manipulation"
5. Substitutes the laymen's definition of "manipulation"
6. Builds a fantasy World of Wall Street from first principles around that definition
7. Argues their fantasy first-principles Wall Street against other participants' fantasy first-principles Wall Street
8. Everyone leaves sync'd on the fantasy of feeling smarter than when they arrived.
"Be kind. Don't be snarky."
https://news.ycombinator.com/newsguidelines.html
If you know more than others, that's wonderful. Please share some of what you know so the rest of us can learn. None of what you wrote here helps anyone learn—it just puts others down, makes you sound supercilious, and makes the community worse. A comment like this stuck at the top of a thread, letting off fumes and polluting the environment with meta nastiness, is one of the worst things that can happen on HN. No one intends it to happen—I'm sure you had no such intention, nor did the upvoters, but it's the default that we co-create on the internet unless we consciously do otherwise.
https://hn.algolia.com/?dateRange=all&page=0&prefix=true&sor...
If you just pour acid on stuff that you scorn, it may get heavily upvoted because everyone is feeling anger and scorning others is a way to relieve that feeling—but you can't pour acid without pouring it on the commons, which is extremely fragile. By getting upvoted, the damage you cause is amplified 1000x. People posting here need to take care of the commons, the same way none of us would pour toxins into a mountain lake, leave campfires burning in a dry forest, or litter in a city park.
I totally get how frustrating, nay maddening it is when others are wrong and ignorant on the internet and self-satisfied about it. But being a good citizen on HN means learning to tolerate the pressure and metabolize the irritation this activates in you. Then you can come back to the commons with a response that builds it up—for example with interesting, relevant information—rather than tearing it further apart.
Our brains are hard-wired to weight painful impressions—like internet comments that seem dumb or wrong—much more heavily than pleasurable ones, like comments we agree with. This makes it feel like HN is dominated by wrongness and dumbness and meanness to a greater extent than it actually is. We all need to become more aware of this mechanism (especially by observing our own reactions more closely) so we don't destroy this place by making the mistake of feeling like it's already been destroyed. The truth is that it's hovering precariously in between.
https://hn.algolia.com/?dateRange=all&page=0&prefix=true&sor...
https://hn.algolia.com/?dateRange=all&page=0&prefix=false&so...
All of these people thought they were smarter than the instruction I received from a real doctor, nurse practitioner, and the CDC. These were smart people, though, and mostly (but not limited to) highly educated engineers.
You're welcome to your opinion but this appeal to authority is seriously wearing thin. Pretty much the only field which hasn't been embarrassed by an outsider of late is physics, and even that might not last forever (I remember the smugness with which Stephen Wolfram is routinely dismissed from having non-consensus views of physics).
Progress almost always comes from non-consensus outsiders. This whole website is supposed to be a testament to that!
I will say that I’m not too busy for this at the moment, and getting to my very basic level of understanding has required me to sort through, at the very least, a fairly decent chunk of reference material and reading interpretations and explanations online.
Like, here’s some things I’ve been grappling with understanding recently:
How do settlement risk, clearing brokers, and clearinghouses work? Why does buying an ordinary stock carry so much settlement risk?
Why do market makers buy stock for delta hedging? How do they figure out how much stock to buy?
To make an analogy, it feels like I’m some kid in chemistry class who just learned how to draw bond diagrams, and then I watch a video of someone talking about how they figured out the structure of some chemical using Raman spectroscopy.
Source: HN expert, to my continual shame.
That is most every online discussion these days. I would only add "first principals learned at highschool and/or undergrad". The real scientists/lawyers/doctors with deep backgrounds in fields, the ones who dare to talk online, stand out like sore thumbs.
When the market wildly diverges from steady state operations, this is an entirely reasonable thing for the SEC to do. An unstable market hurts the average person far more than a stable one.
Stop putting STEM workers on a pedestal. We're still just people. Like everyone else.
Then I had a few people tell me, "Nope, its called a "short squeeze" and totally legal. Then I had to go back and do some research on how short squeezes work. Then I found several instances where this had happened, just not nearly as public because of social media.
The small amount of research opened my eyes to the fact even though something may seem illegal, in the finance world, there's a lot of gray areas and details most people will never know about until something like this happens.
Even during the election, the controversy following the election, and the Capitol riot, the front page didn't get taken over by a flood of articles. Something is different this time. It was not good. I hope it won't happen again.
The moderators on this site do great work, and I'm sure this caught them by surprise and they did their best. I hope a controversy like the one that happened with WSB and Robin Hood in the past few days will not be able to take over this site to such an extent again.
Thoughtful people who have been on this planet for decades build up a world view based on the countless examples of actors on the world stage behaving the way that they do. A single article or internet search is not how we are informed.
Haven't politicians and regulators been doing the same thing for ever?
Can't a normal person challenge that?
Why should we blindly follow the narrative of the politicians and regulators?
Or is this your own fantasy you've built up...
it's amazing how many HN physics comments start with "my theory"
1. Read Wikipedia on another field 2. Decide, based on that knowledge, that the field is “ripe for disruption” 3. Usually fail miserably if parasitic ad tech isn’t the core business model
Even politicians show more humility than these people. It’s as if typing into a computer makes them think they are omniscient high priests. Most of them even have the gall to call themselves engineers. We don’t call machinists engineers, and most programmers are digital machinists.
or what experts call "a model"
I didnt know Vincent Cerf, Tim Berners-Lee et al were HN users.
/ducks
This is the "out" for RH. They'll claim (they already have) that they were protecting their investors
Ha, ha ha, ha ha ha...
Zz 4 :. 1
WtFree speech is allowed.
Prosecuting people for free speech is impossible.
A bunch of imbeciles posting on forums is similar to a bunch of imbeciles on CNBC arguing that price is too high.
A hedge fund with 12 billion dollars shorting 140% of a stock and then using media to drive price to 0 is illegal. Also more then idiotic since they caused the whole problem to begin with. Without their greed there would be no short squeez, gamestop would have been at 50-60 or whatever fair market value instead of suppressed 5-6 dollars a long time ago.
The only illegal thing initially was hedge funds.
They then got punished and went to do other illegal things like wash sales, stopping people from buying, collusion with supposedly neutral market makers.
Whatever happens I hope the people above go broke first, investors that got conned go after their personal belongings for breaking fiduciary and afterwards spend a long time in jail.
And Robinhoods closure of the trade seems reasonable in retrospect as well. If the clearing house required a higher collateral to clear trades on those tickers due to their volatility and RH did not have the liquidity to provide it then blocking the purchase of those tickers seems fair.
I can't really see anything illegal about the actions of the traders or the brokerages like Robinhood and Webull.
The SEC has 170k recorded FTDs for GME in the second half of December 2020: https://www.sec.gov/data/foiadocsfailsdatahtm
GME has been on the NYSE Threshold list for months: https://www.nyse.com/regulation/threshold-securities
Multiple WSB users were aware of this public data and that GME had high FTD rates in significantly more favourable circumstances at least as early as October 2020: https://old.reddit.com/r/wallstreetbets/comments/j0ckgf/reg_... https://old.reddit.com/r/wallstreetbets/comments/jbvwek/fail...
There was no reason to not be ass-naked or close to it on the high end of GME call contract writing a few months ago. They've probably covered (at least partially) by now, but that doesn't mean it hasn't happened.
The point I tried to make was - this short was done to drive price down to zero (it can do that with that large of a position) in collusion with negative media reports from friends... That is manipulation. And they got caught with their pants down.
I'm also not convinced on no naked shorts, we'll see...
As for robinhoods closure of trade, they only disabled buy, not sale... as for reason, are you speculating? I did not see any clearing house comment. This was brought up by Cuomo as well in interview.
As for illegal on robinhoods part, we'll see, there will likely be an investigation. Especially since they are owned by the company that bailed Melvin Capital out.
>Prosecuting people for free speech is impossible.
Are you suggesting that pump and dumps legal because "free speech"?
>A hedge fund with 12 billion dollars shorting 140% of a stock and then using media to drive price to 0 is illegal.
What is the relevant legislation preventing someone from shorting "too much"? Furthermore, prior to this debacle I certainly haven't heard of GME in the media aside from some passing references. Therefore I'm skeptical of your narrative that the hedge funds were somehow using the media to crash GME prices.
Where's the pump and dump?, This is a short squeeze due to Melvin Capitals 140% short and people buying due to initially Cohen joining. Same as for VW a long time ago. Now it's just because people want to buy... Hell I did so as well at recent prices as I think with a nice stock offering GME can get to a 500 fair market value easily. Que in some partnership with Tesla for 'TeslaStop' gaming while charging and they'll be good.
> What is the relevant legislation preventing someone from shorting "too much"?
Look it up under market manipulation. A oversized hedge fund overselling a stock will certainly be able to set the price where they want and then profit.
Neutral analysts on CNBC providing commentary is pretty different than someone with a financial stake trying to pump up a stock they own to maximize their profit.
There is no evidence that any of the major funds involved in shorting have done anything illegal.
There's nothing illegal about a wash sale, wash sales are just a minor technicality around how cost basis is calculated for tax purposes.
People figured out they could exploit a fund that was overexposed in a trade and did so. We don't need all the conspiracies and class warfare. Greedy retail traders took some money from some greedy hedge funds, that's the whole story, it doesn't need to be more than that.
This is amusing, check out interview with Chamath then everything else covered. It's even more amusing when Cramer of all people was the voice of reason.
> There is no evidence that any of the major funds involved in shorting have done anything illegal.
We will see through class action lawsuit against robinhood and SEC investigations.
> There's nothing illegal about a wash sale,
Used the wrong term, I meant the massive sell order (while people were not allowed to buy) trading halt, sell order again, trading halt, a few times to trigger stop losses then price magically goes back up where it was and the sell orders evaporated...
> it doesn't need to be more than that.
Disagree, some investigations are warranted as to how this was allowed to happen. (I'm assuming investors in hedge fund arent happy either at 3 billion loss that we know of) As well as general practices and the dirty tactics employed recently
lol. okay.
I am fairly sure that one fund shorting 140% would have the SEC on your back (that would count as market manipulation).
A comment somewhere mentioned that Melvin had shorted 14%.
Does anyone have some facts here?
How did they lose 3 billion at 65$ with just 14%?
I call bullshit on that :)
There isn't really such thing as decentralized. Its just the authority gets shifted around but the same issues can still show up.