Government Agencies Begin Investigating Robinhood, Reddit Over GameStop Stock (cnet.com) 84
An anonymous reader quotes a report from CNET: GameStop's stock price shot through the roof in late January thanks to traders on Reddit. Now at least two government agencies are reportedly investigating why it happened as well as what roles Reddit and trading app Robinhood played in the stock market craziness. The Department of Justice's fraud section and the San Francisco US attorney's office are seeking information about the trading frenzy from social media companies and trading platforms, according to a report Thursday from The Wall Street Journal. Prosecutors have reportedly subpoenaed information from Robinhood, where many of the trades happened. According to the Journal, Reddit is under investigation by the Commodity Futures Trading Commission (CFTC) as well for its part in possible misconduct with traders at the subreddit r/WallStreetBets who spurred the buying spree of GameStop along with other "meme" stocks. Congress is already planning a hearing on Feb. 18 about the events. Rep. Maxine Waters, a Democrat from California, told Cheddar on Feb. 3 that her committee would hear from Reddit, GameStop, Robinhood and others involved.
Lol (Score:3, Insightful)
So the problem is retail investors buying stocks, not funds which are so overcommitted on shorts that they need a bailout to avoid crashing the economy when it goes bad. Got it.
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Perhaps on the side of the rule of law. Market manipulation is illegal no matter who engages in it.
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Short selling itself is market manipulation.
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Being short (bearish) a stock isn't any more market manipulative than being long (bullish) a stock.
Re:Lol (Score:4, Informative)
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So shorting 140% of the GMA stock and then giving out news that the stock is overvalued and prime for shorting is ok? https://en.wikipedia.org/wiki/... [wikipedia.org].
https://stocknews.com/news/gme... [stocknews.com]
What do you mean ok? Was there an SEC violation at the brokers that allowed that, or not? The shorting is OK.
_GME_ was overvalued. It still is. It was prime for shorting, which is why the short interest was so high. It still is, which is which why the short interest is still high.... duh.
News about GameStop's business still hasn't changed, it's still 1100% up from last year, and poor suckers late to the pump and dump are holding the bag now.
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Re: Lol (Score:2, Insightful)
You can quite literally quote mine Maxine Waters on not caring about the law, instigating insurrection, instigating assault, instigating harassment, not caring about the constitution. This isnâ(TM)t exactly partisan, conservatives, libertarians and liberals alike donâ(TM)t like her, she is an extremist leftist.
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You literally, in the truest sense of the word, described the current Republican party. More specifically, all the Republican Senators who have covered their eyes and ears during the impeachment and claim the then so-called president did no wrong by telling people to fight, to go after other elected officials, including th
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Maxine Waters, an "extremist leftist?"
Honey, she takes more money from the banking industry than pretty much anyone on either side of the aisle. And she's quick to punish anyone who actually tries to regulate them (such as Katie Porter-kicked off the Finance Committee for doing her job).
She's one of the worst corporate Democrats out there, which is saying something for a party that is getting waaaay too chummy with Wall Street.
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The stock market is a parade of antisocial assholism.
The Hedge Funds are about as antisocial as you can get.
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The stock market is a parade of antisocial assholism.
With you there. Can't live without it though.
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Probably true, but it could be regulated better. Enforcing the laws already on the books would be a start.
Re:Lol (Score:5, Insightful)
Market manipulation is illegal no matter who engages in it.
No it isn't. There plenty of legal ways to manipulate the market.
For instance, it is not illegal to short a stock and then disseminate TRUE information about the company. Short sellers such as Muddy Waters [wikipedia.org] specialize in driving down stock prices.
Nor is it illegal to disseminate TRUE information about naked shorting. Nor is it illegal to take advantage of that information.
The only clearly illegal activity was the naked shorting itself, and that was done by the big hedge funds who are now trying to shift the blame onto others.
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Good luck explaining your own private interpretation of this well defined [wikipedia.org] term to the SEC.
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Good luck explaining your own private interpretation of this well defined [wikipedia.org] term to the SEC.
The way OP describes it seems correct to me? You can read the key points about shorts on the SEC web here (the text is quite thorough): https://www.sec.gov/investor/p... [sec.gov]
Re:Lol (Score:5, Insightful)
Missing your point. The topic was market manipulation (a well defined term and always illegal) and you divert to definition of short selling. Which in itself is perfectly legal. However, "it is prohibited for any person to engage in a series of transactions in order to create actual or apparent active trading in a security or to depress the price of a security for the purpose of inducing the purchase or sale of the security by others". Your own link.
Market manipulation is always illegal. Simple concept, simple truth.
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Market manipulation is always illegal. Simple concept, simple truth.
And a statement lacking any basis in law. If you were right there wouldn't be separate rules around specific ways that markets are manipulated. There are. The reality is there's many legal ways to manipulate all sorts of market be they financial of physical.
For example, the world's most manipulated market is the diamond market, where one major company buys up the stock and hordes it. This is market manipulation on the supply side and it is 100% legal.
There's only one way you can legitimately use the qualifi
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a statement lacking any basis in law
You're an idiot. [cornell.edu]
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Nope. You just don't know how to read. Either that or you think one of the paragraphs you quoted applied to redditors causing the price to drop, in which case you're talking about something you don't understand which is ironic since you're calling others idiots.
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The thing about the truly stupid is, they don't know they"re stupid.
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Your conclusion is "Market manipulation is always illegal. Simple concept, simple truth." but the preceding paragraph does not justify that statement, period. Let's look at it:
The topic was market manipulation (a well defined term and always illegal) and you divert to definition of short selling. Which in itself is perfectly legal. However, "it is prohibited for any person to engage in a series of transactions in order to create actual or apparent active trading in a security or to depress the price of a security for the purpose of inducing the purchase or sale of the security by others".
What that says is that market manipulation by buying or selling stocks is illegal. It does not say that market manipulation by publishing facts is illegal. If you want to assert that, which is an entirely separate claim, then you need to show a law which covers that case, not this entirely different case.
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What that says is that market manipulation by buying or selling stocks is illegal. It does not say that market manipulation by publishing facts is illegal.
I suggest not relying purely on the Wikipedia definition, or a Slashdot post. Market manipulation by any means is illegal. Section 10b [cornell.edu] of the Securities Exchange Act spells it out: "It shall be unlawful for any person, directly or indirectly, by the use of any means or instrumentality of interstate commerce or of the mails, or of any facility of any national securities exchange ... to use or employ, in connection with the purchase or sale of any security registered on a national securities exchange or any s
Re:Lol (Score:5, Informative)
The only clearly illegal activity was the naked shorting itself, and that was done by the big hedge funds who are now trying to shift the blame onto others.
As we have seen explained here on Slashdot and elsewhere, 140% short does not necessarily imply 40% or more was shorted without locating a borrow.
Happily, there is a way for us to know the actual amount of naked shorting happening for any US equity, including GME. One simply has to join the failure-to-deliver data set [sec.gov] available from the SEC with data on short interest.
The FTD data from late January is not yet available, but with about 30MM shares short in early January, we were seeing nearly 0.5-1MM failures to deliver daily. In comparison, AON, with about the same number of shares shorted tended to have FTD numbers under 10000.
It's hard to tell how many of those FTD truly were illegal naked shorts, since quite a few eventually get resolved. (Prime brokers do not look kindly on outstanding failures). Anyway, for what it is worth, it looks like illegal naked shorts were about 0-3% of float in early January. The upper end of that range is significant in comparison to other stocks, but I do not have a way to think about how important it could have been in terms of market dynamics. A steady-state 3% does not seem like it would artificially depress stock price terribly much.
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Your post is so underrated. The one person in the thread who knows what the fuck they are talking about.
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The only clearly illegal activity was the naked shorting itself
Want to provide proof there was naked shorting? Short interest above 100% doesn't mean there was any naked shorting occurring. You can have infinite shorting without ever having to naked short.
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Indeed. But you seem to be thinking that there was more than 1 side which engaged in market manipulation. That is wrong. Only the hedgefunds / traders manipulated the market. The retail investors simply bought stock thinking it would go up, kind of the fundamental reason you'd buy stock.
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Did I mention you're an idiot?
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Yep. It was as wrong on the other comment as it is here. Stay ignorant my friend. I honestly envy that fantasy world you live in. Things must be so simple there.
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That is your own private definition of market manipulation. Securities law refers to "any manipulative or deceptive device or contrivance".
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Re:Lol (Score:4, Interesting)
Retail investors don't pay bribes. Hedge funds do. It's a foregone conclusion whose side a money-grubbing scumbag like Maxine Waters would be on.
-jcr
Maxine Waters is a money-grubbing scumbag because she is "concerned about whether or not Robinhood restricted the trading because there was collusion between Robinhood and some of the hedge funds that were involved with this" [slashdot.org]?
Seems she's trying to look out for the small investor to me
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Seems she's trying to look out for the small investor to me
Bull fucking Shit. The piece of shit Maxine Waters isn't looking out for anyone but her own ass. She has been named among the most corrupt in congress a number of times.
https://yro.slashdot.org/comme... [slashdot.org]
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So what is it about Maxine that rustles conservative jimmies? What could it be, hmm...
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No doubt. I'm just pointing out this particular sack of shit because its what the thread is about. I'm sure that other sack of shit, the one that looks like a turtle, smells just the same. Mich MacDonald?
Problem with draining the swamp is Trump didn't scoop out the shit before he refilled it from the honey wagon. As some once said here.
Re: Lol (Score:1)
Thatâ(TM)s why theyâ(TM)re investigating the Redditors for market manipulation. What they say they do is typically not what they actually do.
These people still win elections (Score:2)
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Retail investors don't pay bribes. Hedge funds do. It's a foregone conclusion whose side a money-grubbing scumbag like Maxine Waters would be on.
Got to love it when the truth gets labeled as a Troll.
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The problem is as usual it's an excessively cynical Slashdot type response that bares little resemblance to reality most likely driven by partisan politicisation of the topic, so troll isn't an inherently bad mod in this case.
The issue at hand with this complaint is that there's zero evidence yet that there's any kind of finding of wrongdoing or foregone conclusion of wrongdoing. Given that something like this has never happened before in the markets then it would be absolutely mad if the authorities ignore
Re: Lol (Score:1)
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Retail investors don't pay bribes. Hedge funds do. It's a foregone conclusion whose side a money-grubbing scumbag like Maxine Waters would be on.
-jcr
Maybe someone should create a ETF that invests in bribing politicians, so retail investors can get in on the fun.
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Which side is a foul mouthed scumbag like you on?
Market Manipulation is evil (Score:3, Insightful)
Unless of course, you are a Billionaire or megacorporation which in that case it is just free-market forces.
its funny how.... (Score:3, Insightful)
its funny how the investment banks and fund managers are quite free to manipulate the markets and take every advantage, but as soon as the public do it the government have an enquiry.
Re:its funny how.... (Score:5, Informative)
its funny how the investment banks and fund managers are quite free to manipulate the markets and take every advantage, but as soon as the public do it the government have an enquiry.
That's not why the government is doing an investigation.
Maxine Waters is investigating because she's "concerned about whether or not Robinhood restricted the trading because there was collusion between Robinhood and some of the hedge funds that were involved with this." [slashdot.org]
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Re:its funny how.... (Score:4, Insightful)
Because when you investigate any situation you look at all variables that fed into a situation, regardless of whether they did something illegal or not.
Seriously, you'd make a horrible incident investigator.
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Exactly, and reddit's problem here is that they participate in massive oppressive censorship, but they didn't this time. I agree with that, but they can't use the defense of being an open discussion forum and not responsible for the content.
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The fuck are you talking about. Whether people talk about stocks or not does not change the legality of buying stocks.
Re: its funny how.... (Score:2)
Re:its funny how.... (Score:4, Insightful)
this is looking more like a case of wall street lobbying heavily against regulation because they want to "allow the free market to take care of itself", but when the free market "takes care of itself" in a way they don't like, they actively interfere themselves, for their own benefit. (and for the benefit of their major clients)
They basically pleaded against regulation, and then gave the government exactly the reason they needed to step in and consider action and more regulation.
You can't have it both ways.
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"You can't have it both ways."
Of course you can.
Just a question of price (Of said Congress-critters)
Meme manipulated stocks & crypto (Score:2)
It's become easy for "influencers" to collude to make tons of money in pump & dump schemes. That means buy, then hype up a penny stock or crypto and then dump it. Short it on the way down. Great especially if the followers are mostly cultists, they'll be on sucker-list and the influencer will suffer zero.
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What's that odor? It's kinda... Musky...
Hodl? Moon Lambo? Diamond Hands? (Score:3)
Can't wait to see the new words and definitions officially added to dictionaries following this saga.
What is manipulation? (Score:3)
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A million people buying one share suggests a bit more strongly that there may be a growing consensus that a stock is undervalued. There's nothing illegal about buying a stock you believe is undervalued.
What really needs to be looked at is situations where more shares are shorted than actually exist (140% for GME at the height of shorting). You might call that a "constructive naked short".
WHY ? (Score:2)
The End (Score:1)
If Cruz and AOC agree (Score:3)