5 ms·
With Gary Ginsler at the SEC, who knows?
by CamelCaseName 6y ago
With Gary Ginsler at the SEC, who knows?
- silexia 6y agoPlease keep in mind that by continuing to allow trades, Robinhood was taking on major legal risks. People have been attempting a short squeeze all week. Short squeezes are illegal. By allowing a short squeeze to continue with no action, Robinhood would have been taking on massive legal liability for aiding and abetting illegal activity.
- u10 6y agoThey absolutely are not illegal. Shorts got greedy and got caught out. Should short sellers not have any downside to their trades?
- silexia 6y agohttps://www.sec.gov/investor/pubs/regsho.htm https://www.sec.gov/investor/pubs/regsho.htm. Control plus F "short squeeze". Intentional short squeezes like what is happening in GME is illegal.
- Tokelin 6y agoIntentional would be the key word. Would it be easy to prove it was intentional?
- simias 6y agoI don't know enough about this subject to form an opinion on the legality and morality of what's hapenning right now but if the only rub is whether the squeeze is intentional or not I recommend that you have a peek at the wallstreetbets subreddit right now. It's very much intentional and out in the open.
- stransky 6y agoThe article doesn’t explain why it’s illegal.
- noitpmeder 6y agoIt doesn't need to?
- alex_c 6y agoThank you, I’ve been reading about this all day but this is the first time I see this referenced. I guess the billion dollar question is, legally: does buying stocks in anticipation of a short squeeze, and communicating the same to others, count as manipulation?
- xmodem 6y agovery interesting link, thank you. The exact language is > Although some short squeezes may occur naturally in the market, a scheme to manipulate the price or availability of stock in order to cause a short squeeze is illegal.
- scythe 6y agoIt seems like the key question is what qualifies as a scheme. To me, it seems like you need some kind of secrecy or deception. Also, can you use Clojure to cause a short squeeze, or... [ducks]
- sudosysgen 6y agoIndeed. It was all done out in the open. Someone said "if enough people buy and hold, there will be a short squeeze. For this reason, I'm long GME", which probably doesn't represent a scheme or manipulation, it's just simple facts.
- d1sxeyes 6y ago> a scheme to manipulate the price or availability of stock in order to cause a short squeeze is illegal. The question I think would rotate around whether this is 'a scheme to manipulate', or simply identifying an opportunity to capitalise on Melvin's greedy position.
- unityByFreedom 6y ago> capitalise on Melvin's greedy position Oh please. As if whoever has their thumb on the social media scale isn't greedy. Greed runs the street in longs and shorts. You can invest modestly by diversifying and avoid all that.
- d1sxeyes 6y agoOf course. But the point I'm making is that in my opinion, the demand is being generated by Melvin themselves by having a position with so much risk, it's not artificial demand.
- cortesoft 6y agoA short squeeze by itself is not illegal. It is illegal to make trades whose sole purpose is to manipulate the price of a stock, though.
- silexia 6y agoThis is true. But if you read Reddit and Twitter this week, everyone is making the case to buy and hold to put pressure on short positions. This is an illegal short squeeze.
- monadic3 6y agoThat's surely not in Robinhood's interest to actively regulate this. How can they determine intent at point of purchase?
- AlexCoventry 6y agoWhat statutes establish the criteria for manipulation? I heard (from a non-authoritative source) that the coordination on reddit, etc. is not manipulation.
- EEMac 6y agoI can't find any evidence that a short squeeze is illegal. (https://duckduckgo.com/?q=illegal+short+squeeze&t=ffab&ia=web https://duckduckgo.com/?q=illegal+short+squeeze&t=ffab&ia=we...) Also: If a big hedge fund shorts a stock, expecting to drive its price down, that's cool. (Search "big short drives down stock price") But if regular people buy a stock expecting to drive its price up, that's terrible. Sorry, this position just isn't credible.
- simias 6y agoShorting in and of itself has a builtin risk/reward scenario. You're betting on the company's future performance. What's happening here is that people saw that some investors went overboard with shorting, so they started pumping the stock in order to extract money from said investors. Nobody actually cares about Gamestop's actual worth as a company, it's just a metagame effectively. Once the play is over the stock will collapse back. I don't know if it is or should be illegal but I can see why it raises some questions.
- krastanov 6y agoWait, this is a pretty gigantic claim that needs some backing. There are examples of the SEC instituting temporary bans on short-selling, but this is the closest thing I can find to your claim.
- silexia 6y agohttps://www.sec.gov/investor/pubs/regsho.htm https://www.sec.gov/investor/pubs/regsho.htm. Control plus F "short squeeze". Intentional short squeezes like what is happening in GME is illegal.
- krastanov 6y ago> Although some short squeezes may occur naturally in the market, a scheme to manipulate the price or availability of stock in order to cause a short squeeze is illegal. It says market manipulation is illegal. It is not particularly clear whether a message board getting excited about a short squeeze does not count as something that "may occur naturally".
- ww520 6y agoShort squeeze is legal. What are you talking about?
- nawgz 6y agoYou are continuing to comment, directly or negligently, misinformation without sources. Please source the following comment: > by continuing to allow trades, Robinhood was taking on major legal risks There is no one else sharing this talking point that I can see. I will continue to call you a shill. Please see my comment history to understand that this user is quite interested in spreading misinformation, and given their previous topics, looks to be being compensated for doing so.
- renewiltord 6y ago> Please keep in mind that by continuing to allow trades, Robinhood was taking on major legal risks. Obviously not the reason, since they posted a blog saying they did it to protect consumers from volatile stock.
- deleted 6y ago[deleted]
- EpicEng 6y agoThey did it because they can't meet their collateral requirements. The fact that they're in bed with Citadel, which owns Melvin Cap., just makes it that much worse.