Yeah, I think the powers-that-be at the SEC and in the White House know that they can't come down on the private citizens because they know that no laws were broken. In contrast, what Robinhood and other trading companies did could very well be construed as illegal. But of course, Robinhood did what it did because it was pressured to do so by financial companies whose hedge funds investments were costing them big money. But that won't come out. Robinhood's leaders might very well be the scapegoats of the week (though they damn well knew that they shouldn't have done what they did):
Last Edit: Jan 30, 2021 14:28:29 GMT -5 by robeiae
Ya know? this whole thing about some anomalous reddit traders going up against the all mighty hedge fund is pretty absurd. Hedge funds have traditionally cannibalized each other. These people are used to it, and design their strategies to account for the battles.
The ones who are f..ed are the clearing houses, as they should be. this is not the fault of a trader / hedge fund, it's the fault of the rule makers.
Some fishiness going on today. Several MSM and local news sources are reporting that "redditors" (presumably Wallstreetbets members) are turning their attention to silver in order to drive up the value, and currently silver is surging.
However, if you go to WSBs on Reddit, you'll find nothing that's suggesting that people should buy silver. In fact, they're calling these stories out as lies:
Which leads me to wonder if this is possibly a maneuver on the part of more elite investors to try to manipulate the market (again) to help them further recoup some of their losses from last week. I saw a clip of an old interview with Jim Cramer claiming that one way that these companies manipulate the market (for shorts) is to "leak" stories to financial journalist dupes who will then run with the story and cause the stock to fall/surge in the direction the company wanted.
So, this makes me suspect that the current story claiming that the WSB redditors are behind it might very well have been leaked to the press by "someone," and I would not doubt that it was actually someone from one of these elite funds, trying to game the system again to their benefit all while pulling a misdirection and making Redditors the scape goats.
U.S. Securities and Exchange Commission investigators are combing social media and message board posts for signs that fraud played a role in dizzying stock swings for GameStop Corp., AMC Entertainment Holdings Inc. and other companies, according to people familiar with the matter.The scrutiny is being done in tandem with a review of trading data to assess whether such posts were part of a manipulative effort to drive up share prices, said the people, who requested anonymity because the review isn’t public. The regulator is specifically on the hunt for misinformation meant to improperly tilt the market, the people said.
The prevailing narrative is that Wall Street short-sellers were caught flatfooted over the past two weeks as retail traders banded together via Reddit message boards and bought up stocks that hedge funds were betting against. But some market participants, including famed short-seller Carson Block, have started to speculate that the short squeezes that drove GameStop, AMC and other stocks to exorbitant heights might have also involved professional investors who either took advantage of the Reddit-fueled frenzy or helped hype it.
The SEC hasn’t said whether there’s anything to Block’s theory, but acting chair Allison Herren Lee said in a statement earlier this week that the agency was looking at “compliance with regulatory obligations, adequate and consistent risk disclosure, and determining if any fraudulent or manipulative behavior has occurred.”
There is also mounting concern about the possibility of bot activity in Reddit’s WallStreetBets chat after a spokesperson for the forum told CBS News that there was a “large amount” of it and that some posts were being blocked by an automated moderation system.
Christ, why am I not surprised. All the speculations and investigations still ignore the real issue, which is the fact that what the redditors did and what the asshole short sellers do is (somehow) completely legal. THAT's what regulators should be focused on.
But some market participants, including famed short-seller Carson Block, have started to speculate that the short squeezes that drove GameStop, AMC and other stocks to exorbitant heights might have also involved professional investors who either took advantage of the Reddit-fueled frenzy or helped hype it.
You know what else they call professional investors? That's right, "hedge funds".
The Curious Case Of The Hedge Fund That Made $700 Million On GameStop
While retail was "sticking it to the suits" - the actual suits at hedge fund Senvest Management were about to net a cool $700 million on GameStop's run higher. Why? Because GME was the largest Senvest holding as of Oct 7, an oddity considering many within the hedge fund world at the time viewed it as a potential bankruptcy candidate - hardly a prudent move from a fiduciary standpoint, unless Senvest had a plan... and boy did it have a plan.
Robinhood is being sued for the wrongful death of a 20-year-old college student who died by suicide last summer after he saw a negative balance of $730,000 in his trading account and mistakenly believed that was the sum of money he owed.
The parents and sister of Alexander Kearns accused Robinhood of luring inexperienced investors like their son to take big risks in sophisticated financial instruments such as the options trading he engaged in -- without providing the necessary customer support and investment guidance.
"Robinhood built out its trading platform to look much like a videogame to attract young users and minimize the appearance of real-world risk," reads the lawsuit filed Monday in California by Kearns' parents Dan and Dorothy and sister Sydney.
I mean, I'm sorry for that family's loss, but that's a really stupid lawsuit. He was a legal adult, free to make his own choices and it's not Robinhood's fault if he misinterpreted what was on his screen and then decided to take his own life over it.
People have shit for memories and they'll forget about Robinhood as soon as the next shiny thing pops up. Just like they've already forgotten about Robinhood screwing countless users back in the market freefall of March.
And in the first quarter of 2021, Robinhood raked in $331 million from what is known as payment for order flow — its biggest source of revenue — in which the company makes money off of high-speed traders to whom it routes customers’ orders. That’s more than triple the $91 million brought in during the first quarter of 2020.