Which is one take, certainly. But the problem is once you say that this is a market manipulation event you run into other issues.
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?
If WSB was a hedge fund they just have to buy some of GME - not all or even too much. Other hedge funds could buy some too.
Just have a "dinner conversation" about it.
Just like you and a few hedge funds can get together and collectively short GameStop and other companies... as they are doing now.
There's no rule that I know of that says only one entity can make a specific investment.
-edit-
Don't forget that hedge funds ARE on the other side of this trade. WSB and retail do not have the ability to move this solely on their own. I wonder how long until they're on CNBC/Bloomberg "we saw a great opportunity in the market and executed our position well". If it's market manipulation - was it market manipulation to even have heard about WSB and entered the trade? WSB is a nice scapegoat for the real money that caught these hedge funds in a bad position. Didn't take long before WSB became alt-right, white supremacist, market manipulators... etc.
It isn't. Hedge fund managers have "idea dinners" with dozens of their friends all the time to discuss what plays they are thinking... they frequently also bring in guests that represent companies, or even politicians/former politicians to discuss lobbying strategies to keep this exact type of collusion and market manipulation legal for them.
But as soon as a bunch of the dreaded "retail investors" start doing it in the open, Wall Street calls on K Street to save them.
That's amazing. So they basically found a legal protocol to do things that would otherwise be illegal, and institutions like judges and the SEC just let that happen?
It could be argued that r/wallstreetbets is a public forum. Anyone can join. Think of it like a virtual conference room.
If I walk into this room and yell “Everybody buy GME to screw the hedge funds” am I engaging in market manipulation? There is no formal or informal agreement to do so if someone says “ok great idea” and go buys GME.
Besides how are they going to enforce the laws? Match IPs to ISPs and extradite all the thousands if not millions of people across the world who bough stock? If a fine is issued do they just divide it up by the number of people who commented in wallstreetbets and held stock? Or is every person fined individually?
How is this worse than the sell walls that hedge funds use to deflate a share price?
The truth of the matter is the SEC dropped the ball. They were probably too busy having a wank while on pornhub [0].
In December as soon as the share price started to rise GME was placed on the NYSE threshold securities list for large numbers of “failure to deliver”. Keep in mind it had entered this same list earlier in the year. Followers of wallstreetbets were suspicious and believed that illegal naked short selling was occurring so they informed the SEC [1].
Then a few weeks later the stock rose 10% then 50% the next day leaving the call options ITM on a Friday afternoon. What did the SEC do? They sat on their hands over the weekend instead of suspending trading of the stock and performing an investigation.
If you actually read that link that case is so extraordinarily different than the reality of what’s happening today I don’t know how you can argue this in good faith.
> I don’t know how you can argue this in good faith
I'm not an expert and am rather dumb.
What do you think the differences are?
Differences:
* One hedge fund versus a multitude of investors
* Owning all the securities vs only a portion
The similarities are:
* Intentionally buying all the stock to cause a short squeeze
* Explicitly recalling borrowed shares to cause a short squeeze
To be clear, I'm not arguing that what wallstreetbets is doing is illegal but something fairly similar is. I thought an actual example of market manipulation was relevant to the conversation.
A short squeeze in and of itself is not illegal. The squeezers were not prosecuted in 2008 when they held onto VW even though it briefly became the most valuable stock in the world. Seeing an opportunity to advantage oneself of a bad short position is just trading, nothing fancier than that.
The Falcone case is much more complicated because it was a single person buying the entirety of the market. Much weirder mechanics at play. Squeezes are always carried out through the self-interest of uncoordinated parties, be they retail investors or firms.
well, the case reached a settlement so i would not say it was litigated in the sense of establishing case law or legal precedent.
it's interesting- it reads as though harbinger bought bonds and demanded delivery. can you imagine it! asking to take possession of the thing you just bought is painted as manipulation!!!
You realise that all of this stuff has specific rules. There are specific rules about posting research, there are specific rules about media (newspapers and TV), there are specific rules about algorithms (I will answer your questions: no, no, no, no...the last question is...odd, if you know about sure-win algos then you must be very rich).
And all of this stuff has happened before, it happened in 2000, lots of people went on bulletin boards, and some ended up going to jail for market manipulation. The difference between doing it publicly and privately is huge, that is a necessary component of market manipulation (generally speaking, market manipulation isn't very effective if you don't have anyone to baghold for you).
I'm certainly no expert in the rules at play here, but I can't fathom how posting on a public forum and saying "let's all go buy $GME and screw these hedge fund guys!" would not be absolutely protected by the First Amendment. There's no fraud or anything like that, and you're not posting anything false or misleading about the company.
If a bunch of people feel like it's a good idea and want to join in, then it is what it is.
Because there is the first amendment...and there is securities fraud. You are saying: anything that anyone says at any time has no legal consequence because of the first amendment...no.
Misleading stuff is being posted on wsb. And some people are likely not being honest about what they are doing (i.e. telling people to buy when they are selling). This is how pump and dumps work. If you buy a stock worth $5 for $300...your only option is to sell to someone who knows nothing. That is what it is happening now.
The stuff about hedge funds only came later, it is funny that people are citing this now (as ever, financial markets and ex-post rationalisations...human reasoning is amazing). All this stuff about revolutions against bankers, and the wealthy, and politicans leaping onto it...lol. The funniest thing about this is that people who have the least knowledge believe they need protection the least...and when this blows up, they will still say it is rigged. Oh well. Plus ca change.
I'm more of a "spirit of the thing" than "this is what the text says" kind of guy.
I'd argue that those things aren't fundamentally different than anything going on via WSB (assuming no bot accounts saying buy buy buy or something similar).
I think the difference is that for these other items there's nobody around to measure the impact.
No. If you do any of those things wrong then you will get charged.
There aren't bot accounts. There are people telling other people to buy who are probably selling (there is a reason why DFV isn't posting anything but account updates). No conpsiracy theory around bots, the people manipulating the market are there, they are posting on a public forum. It doesn't get more cut and dry.
I just don't see a difference in manipulating the markets through official channels versus unofficial channels. If CNBC wants to have me or reddit user r/deepfuckingvalue (Keith Gill) on their platform instead of WSB sure I'll give them some stock picks too.
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?