This is the main thing I got out of this story when it first broke.
The firm was able to buy over a billion dollars worth of stock but was undercapitalized after incuring a loss ~5MM? Just doesn't make sense.
The firm was able to buy over a billion dollars worth of stock but was undercapitalized after incuring a loss ~5MM? Just doesn't make sense.
But if you buy the shares in the morning and the price goes down, if you want to 'hold' and wait, you need $1B to cover the purchase of the stock, but if you want to 'cut your losses' you just sell the stock again for what ever you can get before the markets close.
I'm guessing this was what happened, and at the end of the day the difference was $5.3M which the company had to come up with to balance their accounts. That left them with not enough money for day to day operations, poof they are dead.
Along comes this trader buying on behalf of the company and not a customer, and now they're stuck with a $5m hole and that was all of payroll for the year etc.