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There's been some speculation that what WSB are doing could be market manipulation or otherwise illegal. The fact that this statement only mention retail invest

There's been some speculation that what WSB are doing could be market manipulation or otherwise illegal. The fact that this statement only mention retail investors in the context of protecting them makes me suspect that the SEC's not going for it.

jeffbee 6y ago
Could be? It's an open, publicly-documented market manipulation event. How can there be any question about it? You might decide that this kind of manipulation is OK due to it's stated goals, but that doesn't make it not manipulation.
- willcipriano 6y ago
  >Could be? It's an open, publicly-documented market manipulation event. Strange question, what's the bar for market manipulation? For example if a company took out debt to buy their own stock in order to drive up the price would that count?
  - jeffbee 6y ago
    If the company were to issue a statement that they believed their actions would raise the share price, then yes. https://www.law.cornell.edu/uscode/text/15/78i https://www.law.cornell.edu/uscode/text/15/78i
    - deleted 6y ago
      [deleted]
    - pbourke 6y ago
      So do everything up to specifically stating the effect that you want, and it’s not market manipulation? This is the “emperor’s new clothes” absurdity of this whole system. The whole fucking market has been manipulated by various parties this year, most notably by the Federal Reserve, yet there’s only a moral panic when some firefighter from Long Island gets a little taste?
  - foolmeonce 6y ago
    Stock buy back is perfectly fine and its authorization is usually announced in a press release. Hiding that you are taking new debt to do just about anything would be illegal.
- moolcool 6y ago
  I can't find any documentation that a short squeeze is illegal. Can you?
  - TeMPOraL 6y ago
    It's in the SEC rules. "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." From https://www.sec.gov/investor/pubs/regsho.htm https://www.sec.gov/investor/pubs/regsho.htm. It's an open question whether this case is more of a natural occurrence or "a scheme to manipulate", given that it's all randos who found a Schelling point and are now hyping each other up. I think it's fair to say it's unprecedented.
    - OscarCunningham 6y ago
      If I were the short-sellers I'd be a bit aggrieved at the SEC not going after WSB here. People keep saying that the hedge funds 'knew what they were getting into', and are therefore fair game. But they could well have thought that they were protected by this regulation. It's unlucky for them that they got squeezed by loveable retail investors rather than another hedge fund that the SEC would have no qualms about prosecuting. In the debate between the free market vs regulation, the worst possible outcome is to have people thinking they are protected by regulation when they in fact aren't.
      - willcipriano 6y ago
        The shorters should form a class action and sue wall street bets, I'm sure a 5 dollar check in 3 years and a year of free stonk advice will cover it right?
        jsmith45 6y ago
        Wall street bets is not an organization, and does not really even have a defined membership, and I've never heard of a court case with a class as a defendant. But I suppose that would be a really amusing circus show. Class of shorters vs class of buyers.
- hansvm 6y ago
  There's a bit of nuance. We're using the word "manipulation" to mean two different things -- one is the colloquial meaning, and yes it's very obvious that the price was manipulated in that sense. As far as the legal definition of manipulation is concerned though, we haven't necessarily met all the requirements.
- bwilliams18 6y ago
  Matt Levine did a pretty good job explaining why it probably doesn't fit the traditional definition of market manipulation in his newsletter on Tuesday[1], see the second section titled "But is it securities fraud?" [1]https://www.bloomberg.com/opinion/articles/2021-01-26/will-wallstreetbets-face-sec-scrutiny-after-gamestop-rally https://www.bloomberg.com/opinion/articles/2021-01-26/will-w...
- wslh 6y ago
  > It's an open, publicly-documented market manipulation event. I understand that if someone publicly give you a financial strategy that is sound and it is not based on a ponzi then it is a recommendation.
- Dirlewanger 6y ago
  Ever think that they just like the stock?
  - jeffbee 6y ago
    That's the thing: there is NO QUESTION as to the motives of the r/wsb traders. They are overtly conspiring to raise the price of shares in order to force specific parties to buy it. That's manipulation!
    - ceejayoz 6y ago
      It's manipulation, but is it illegal manipulation? Remember, it's perfectly legal for a hedge fund to open a short position, and then release a big expose of the company that tanks its stock price. For a prominent recent example: https://hindenburgresearch.com/nikola/ https://hindenburgresearch.com/nikola/
      - deleted 6y ago
        [deleted]
    - TheCapn 6y ago
      >force specific parties to buy it I think they forced themselves to buy it by taking the short position they did.
    - RHSeeger 6y ago
      Is it illegal to corner the market on a product because you know someone else is going to need to buy it, so you can charge them a lot because they must buy from you? It seems like what is being done is pretty much this; just for a large definition of "you".
      - jeffbee 6y ago
        Yes, it is broadly illegal to corner or attempt to corner any market, and the law directs the CFTC to step in and and void commodities contracts or take whatever other actions it deems appropriate when it finds that a market has been destabilized. See 7 USC 12a(9).
- gnfargbl 6y ago
  Whether or not it is market manipulation, who do you think the SEC could realistically go after here?
  - jeffbee 6y ago
    Maybe one or two specific individuals, but you're right in general. That's the part that frightens me the most here. The tactics that are being used are equivalent to the ones used by sideshow street racers and political riots: if we get thousands of individuals to break the law at the same time and place then law enforcement will be ineffective.
    - gnfargbl 6y ago
      It certainly _feels_ like an organized riot, but I'm not 100% sure that it is. In a riot, there are organizers and instigators, and then there is a mob who follows them. Here, I'm not really sure that the organizers exist: the closest thing I can see is the Reddit user DeepFuckingValue, and all they do is post screenshots of their position in GME without futher comment. And have been doing so for the best part of a year. The mob seems to have largely formed itself.
      - kchr 6y ago
        Have you heard of sock puppet accounts? Rogue agents? :-)
    - hhhar42 6y ago
      You really need to stop accusing thousands of people of lawbreaking when several actual securities lawyers with backgrounds in actual manipulation litigation have said it isn’t as cut and dry as you think. Tying the activity to the riots and suggesting similar organization is also beyond the pale. You have cited neither of those positions throughout your ranting here and they’re harmful speculation. Your commentary in this thread is over the top. I’d use a term you already have (edit: and deleted, looks like) which definitely applies, but I’m not stooping there, and you’re probably on your way to a flag for it anyway. I suggest you step back from HN for a few minutes, at least.
- moosey 6y ago
  Applying this logic, perhaps we can get "professional" stock ... manipulators off the TV. CNBC can go away entirely. Marketing speak would be replaced with value charts. Ban all forums that discuss specific stock values. Then prevent people from buying stocks in groups. Mutual funds, ETFs, etc... all of these abstractions on abstractions, we can throw them away. The more abstractions we throw away, the closer we get to what all this should actually be meant to serve; people.
  - NoOneNew 6y ago
    Absolutely. I mean, what's different now in comparison to Ackman shorting hotels then going on CNBC and saying hotels are going to burn financially? Except for the fact it's one rich guy compared to thousands (maybe millions?) of not so rich folks.
    - mrlala 6y ago
      Well.. I think the difference is that if there are literally millions of people immediately acting in a certain fashion (suddenly buying up a specific stock) in a coordinate fashion- that has a very different effect than a small number of large investors taking a bet. I'm not defending the bullshit that is CNBC and 'professional stock pickers' and crap, but it ends up to be a very different thing. Not saying better or worse, but certainly different.
- deleted 6y ago
  [deleted]
- ericmay 6y ago
  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?
  - jeffbee 6y ago
    You are not the first person to ponder these questions. There is a great deal of jurisprudence on these topics. Any market participant firm's compliance desk can readily answer all of them.
  - acover 6y ago
    If wallstreetbets was a hedge fund and they bought all of GME to cause a short squeeze then that is market manipulation - this has been settled [0]. [0] - https://www.sec.gov/news/press-release/2013-159 https://www.sec.gov/news/press-release/2013-159 Edit: litigated to settled
    - ericmay 6y ago
      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.
- qmmmur 6y ago
  People are free to purchase stock how they want to. If those people collect together and discuss potentially profitable strategies for trading who is to stop them? Do you think its possible youve fallen ill to the rhetoric that this is bad purely because the rich people didn't get their way?
  - kshacker 6y ago
    But people are not being allowed to purchase stock as they want. Robinhood now allows you to buy a grand total of 5 shares of GME.
    - spydum 6y ago
      that's a service delivery problem, just like when a restaurant runs out of a popular dish. Go to another broker.
  - SpicyLemonZest 6y ago
    I have a general, all-purpose opposition to financial trading that’s about exploiting weird market structure tricks to screw people over rather than expressing beliefs about the value of the underlying things being traded. Institutional traders too often get away with doing that kind of thing, and I’m hardly losing sleep over the particular targets of this campaign, but we can’t let the takeaway here be “it’s fine as long as retail investors get to play too”.
    - blackearl 6y ago
      The issue with that argument is that it's really not “it’s fine as long as retail investors get to play too," it's “it’s fine until retail investors get to play too”
      - SpicyLemonZest 6y ago
        The point is that it's not fine. The institutional investors who have historically said it was fine were wrong. If the average retail investor comes away thinking scummy tactics are cool now that you and I can use them, it'll be a disaster for the cause of real financial reform.
- avs733 6y ago
  The SEC has some case studies on this that are really itneresting... https://www.sec.gov/files/Market%20Manipulations%20and%20Case%20Studies.pdf https://www.sec.gov/files/Market%20Manipulations%20and%20Cas... The idea that there has to be behind the scenes coordination (i.e., non-publically available communication/information) runs pretty clearly through all of them, but IANASEC
- asimpletune 6y ago
  Persuading people that they should invest in X company for Y reason is not market manipulation. People who take a short position frequently announce their short publicly, with the express aim of achieving their goals.
- mbesto 6y ago
  > Could be? It's an open, publicly-documented market manipulation event. And required the coordination of a 18th century war to pull off. It's one thing if this was "led" by an individual, organization, etc. but it wasn't. It was the wisdom of the crowds who played by the very same rules that the hedge funds play. > You might decide that this kind of manipulation is OK due to it's stated goals Where did every stock holder publicly state their case? If Jim Cramer says "i think you should buy AAPL" and everyone does it, is that manipulation? > How can there be any question about it? Easy. If it were illegal, who would prosecute?
Tenoke 6y ago
A SEC investigation will take time. I wouldn't judge much based on their general initial statement.
balozi 6y ago
Well... they will start by redefining "market manipulation" to encompass all activity they now consider disruptive (also suitably redefined). This is America today.
- datavirtue 6y ago
  This. Man walks into a hardware store and buys a Milwaukee drill. Bam, supply reduced, market manipulated.
- nsonha 6y ago
  Your point? Can disruptive ever be good? Other than in SV jargons?
  - bradstewart 6y ago
    Good for who? Why does an event have to be good or bad?
- PeterisP 6y ago
  There's no need for SEC to redefine market manipulation - IMHO the "pumping" activity of at least some WSB activists would perfectly match the existing legal definition of market manipulation as written to prevent historical "boiler room" type activities. On the other hand, in these discussions I have seen a bunch of assertions that what the shorting hedge funds or HFTs are doing is "market manipulation" - now that is an attempt to redefine market manipulation to something entirely different than what it is/was.
nrmitchi 6y ago
I don't think it's fair here to assume that by "retail investors" the SEC means all retail investors. Retail is not one giant group. It is possible for one group of retail (lets say the original WSBs crowd) to take illegal action that harms other retail investors. Taking action to protect the mass of retail does not mean that all of retail is immediately in the clear.
nend 6y ago
Doesn't "retail investors" refer to any individual, non-professional, investor? Sounds like to me the SEC is warning any party involved in this, RH and WSB included.
csomar 6y ago
It's harder to pursue this if there were hundreds of thousands involved. Maybe they'll go for the people who organized this, or the one who profited massively for it. But I don't see it possible to sue a million person.
nostrademons 6y ago
Third paragraph: > In addition, we will act to protect retail investors when the facts demonstrate abusive or manipulative trading activity that is prohibited by the federal securities laws. Market participants should be careful to avoid such activity. "Market participants" here is referring to retail traders. Don't make the mistake of thinking that just because you're the little guy, you're exempt from the law. It's like how the capitol rioters were sure they were on the side of America but the FBI (and half of America) sees things very differently. A lot of government regulation is about protecting the little guy from other slightly more unscrupulous little guys. "The public" is not a monolithic entity - folks can and do screw each other over even when purporting to be part of the same mass movement.
pardonmesir 6y ago
what are you talking about? the real fraud and market manipulation was perpetrated by Robinhood and Shitadel when they shut peoples’ ability to buy the stock while still allowing it to be sold. They know this is illegal but they were betting on the fines being less than the losses. They need to be taught a real lesson. Those responsible for this intentional, flagrant violation of the most basic free market principles should go.to.jail.
- deleted 6y ago
  [deleted]
- kapp_in_life 6y ago
  If anything Robinhood allowing people to continue buying volatile assets while not being able to meet their clearing house's requirements would be something to run them afoul of the SEC.
TheAdamist 6y ago
crowd sourcing / gig working a pump n dump instead of running a boiler room operation. Just add gig work to anything and rules no longer apply.

jeffbee 6y ago

Could be? It's an open, publicly-documented market manipulation event. How can there be any question about it? You might decide that this kind of manipulation is OK due to it's stated goals, but that doesn't make it not manipulation.

willcipriano 6y ago
>Could be? It's an open, publicly-documented market manipulation event. Strange question, what's the bar for market manipulation? For example if a company took out debt to buy their own stock in order to drive up the price would that count?
- jeffbee 6y ago
  If the company were to issue a statement that they believed their actions would raise the share price, then yes. https://www.law.cornell.edu/uscode/text/15/78i https://www.law.cornell.edu/uscode/text/15/78i
  - deleted 6y ago
    [deleted]
  - pbourke 6y ago
    So do everything up to specifically stating the effect that you want, and it’s not market manipulation? This is the “emperor’s new clothes” absurdity of this whole system. The whole fucking market has been manipulated by various parties this year, most notably by the Federal Reserve, yet there’s only a moral panic when some firefighter from Long Island gets a little taste?
- foolmeonce 6y ago
  Stock buy back is perfectly fine and its authorization is usually announced in a press release. Hiding that you are taking new debt to do just about anything would be illegal.
moolcool 6y ago
I can't find any documentation that a short squeeze is illegal. Can you?
- TeMPOraL 6y ago
  It's in the SEC rules. "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." From https://www.sec.gov/investor/pubs/regsho.htm https://www.sec.gov/investor/pubs/regsho.htm. It's an open question whether this case is more of a natural occurrence or "a scheme to manipulate", given that it's all randos who found a Schelling point and are now hyping each other up. I think it's fair to say it's unprecedented.
  - OscarCunningham 6y ago
    If I were the short-sellers I'd be a bit aggrieved at the SEC not going after WSB here. People keep saying that the hedge funds 'knew what they were getting into', and are therefore fair game. But they could well have thought that they were protected by this regulation. It's unlucky for them that they got squeezed by loveable retail investors rather than another hedge fund that the SEC would have no qualms about prosecuting. In the debate between the free market vs regulation, the worst possible outcome is to have people thinking they are protected by regulation when they in fact aren't.
    - willcipriano 6y ago
      The shorters should form a class action and sue wall street bets, I'm sure a 5 dollar check in 3 years and a year of free stonk advice will cover it right?
      - jsmith45 6y ago
        Wall street bets is not an organization, and does not really even have a defined membership, and I've never heard of a court case with a class as a defendant. But I suppose that would be a really amusing circus show. Class of shorters vs class of buyers.
hansvm 6y ago
There's a bit of nuance. We're using the word "manipulation" to mean two different things -- one is the colloquial meaning, and yes it's very obvious that the price was manipulated in that sense. As far as the legal definition of manipulation is concerned though, we haven't necessarily met all the requirements.
bwilliams18 6y ago
Matt Levine did a pretty good job explaining why it probably doesn't fit the traditional definition of market manipulation in his newsletter on Tuesday[1], see the second section titled "But is it securities fraud?" [1]https://www.bloomberg.com/opinion/articles/2021-01-26/will-wallstreetbets-face-sec-scrutiny-after-gamestop-rally https://www.bloomberg.com/opinion/articles/2021-01-26/will-w...
wslh 6y ago
> It's an open, publicly-documented market manipulation event. I understand that if someone publicly give you a financial strategy that is sound and it is not based on a ponzi then it is a recommendation.
Dirlewanger 6y ago
Ever think that they just like the stock?
- jeffbee 6y ago
  That's the thing: there is NO QUESTION as to the motives of the r/wsb traders. They are overtly conspiring to raise the price of shares in order to force specific parties to buy it. That's manipulation!
  - ceejayoz 6y ago
    It's manipulation, but is it illegal manipulation? Remember, it's perfectly legal for a hedge fund to open a short position, and then release a big expose of the company that tanks its stock price. For a prominent recent example: https://hindenburgresearch.com/nikola/ https://hindenburgresearch.com/nikola/
    - deleted 6y ago
      [deleted]
  - TheCapn 6y ago
    >force specific parties to buy it I think they forced themselves to buy it by taking the short position they did.
  - RHSeeger 6y ago
    Is it illegal to corner the market on a product because you know someone else is going to need to buy it, so you can charge them a lot because they must buy from you? It seems like what is being done is pretty much this; just for a large definition of "you".
    - jeffbee 6y ago
      Yes, it is broadly illegal to corner or attempt to corner any market, and the law directs the CFTC to step in and and void commodities contracts or take whatever other actions it deems appropriate when it finds that a market has been destabilized. See 7 USC 12a(9).
gnfargbl 6y ago
Whether or not it is market manipulation, who do you think the SEC could realistically go after here?
- jeffbee 6y ago
  Maybe one or two specific individuals, but you're right in general. That's the part that frightens me the most here. The tactics that are being used are equivalent to the ones used by sideshow street racers and political riots: if we get thousands of individuals to break the law at the same time and place then law enforcement will be ineffective.
  - gnfargbl 6y ago
    It certainly _feels_ like an organized riot, but I'm not 100% sure that it is. In a riot, there are organizers and instigators, and then there is a mob who follows them. Here, I'm not really sure that the organizers exist: the closest thing I can see is the Reddit user DeepFuckingValue, and all they do is post screenshots of their position in GME without futher comment. And have been doing so for the best part of a year. The mob seems to have largely formed itself.
    - kchr 6y ago
      Have you heard of sock puppet accounts? Rogue agents? :-)
  - hhhar42 6y ago
    You really need to stop accusing thousands of people of lawbreaking when several actual securities lawyers with backgrounds in actual manipulation litigation have said it isn’t as cut and dry as you think. Tying the activity to the riots and suggesting similar organization is also beyond the pale. You have cited neither of those positions throughout your ranting here and they’re harmful speculation. Your commentary in this thread is over the top. I’d use a term you already have (edit: and deleted, looks like) which definitely applies, but I’m not stooping there, and you’re probably on your way to a flag for it anyway. I suggest you step back from HN for a few minutes, at least.
moosey 6y ago
Applying this logic, perhaps we can get "professional" stock ... manipulators off the TV. CNBC can go away entirely. Marketing speak would be replaced with value charts. Ban all forums that discuss specific stock values. Then prevent people from buying stocks in groups. Mutual funds, ETFs, etc... all of these abstractions on abstractions, we can throw them away. The more abstractions we throw away, the closer we get to what all this should actually be meant to serve; people.
- NoOneNew 6y ago
  Absolutely. I mean, what's different now in comparison to Ackman shorting hotels then going on CNBC and saying hotels are going to burn financially? Except for the fact it's one rich guy compared to thousands (maybe millions?) of not so rich folks.
  - mrlala 6y ago
    Well.. I think the difference is that if there are literally millions of people immediately acting in a certain fashion (suddenly buying up a specific stock) in a coordinate fashion- that has a very different effect than a small number of large investors taking a bet. I'm not defending the bullshit that is CNBC and 'professional stock pickers' and crap, but it ends up to be a very different thing. Not saying better or worse, but certainly different.
deleted 6y ago
[deleted]
ericmay 6y ago
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?
- jeffbee 6y ago
  You are not the first person to ponder these questions. There is a great deal of jurisprudence on these topics. Any market participant firm's compliance desk can readily answer all of them.
- acover 6y ago
  If wallstreetbets was a hedge fund and they bought all of GME to cause a short squeeze then that is market manipulation - this has been settled [0]. [0] - https://www.sec.gov/news/press-release/2013-159 https://www.sec.gov/news/press-release/2013-159 Edit: litigated to settled
  - ericmay 6y ago
    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.
qmmmur 6y ago
People are free to purchase stock how they want to. If those people collect together and discuss potentially profitable strategies for trading who is to stop them? Do you think its possible youve fallen ill to the rhetoric that this is bad purely because the rich people didn't get their way?
- kshacker 6y ago
  But people are not being allowed to purchase stock as they want. Robinhood now allows you to buy a grand total of 5 shares of GME.
  - spydum 6y ago
    that's a service delivery problem, just like when a restaurant runs out of a popular dish. Go to another broker.
- SpicyLemonZest 6y ago
  I have a general, all-purpose opposition to financial trading that’s about exploiting weird market structure tricks to screw people over rather than expressing beliefs about the value of the underlying things being traded. Institutional traders too often get away with doing that kind of thing, and I’m hardly losing sleep over the particular targets of this campaign, but we can’t let the takeaway here be “it’s fine as long as retail investors get to play too”.
  - blackearl 6y ago
    The issue with that argument is that it's really not “it’s fine as long as retail investors get to play too," it's “it’s fine until retail investors get to play too”
    - SpicyLemonZest 6y ago
      The point is that it's not fine. The institutional investors who have historically said it was fine were wrong. If the average retail investor comes away thinking scummy tactics are cool now that you and I can use them, it'll be a disaster for the cause of real financial reform.
avs733 6y ago
The SEC has some case studies on this that are really itneresting... https://www.sec.gov/files/Market%20Manipulations%20and%20Case%20Studies.pdf https://www.sec.gov/files/Market%20Manipulations%20and%20Cas... The idea that there has to be behind the scenes coordination (i.e., non-publically available communication/information) runs pretty clearly through all of them, but IANASEC
asimpletune 6y ago
Persuading people that they should invest in X company for Y reason is not market manipulation. People who take a short position frequently announce their short publicly, with the express aim of achieving their goals.
mbesto 6y ago
> Could be? It's an open, publicly-documented market manipulation event. And required the coordination of a 18th century war to pull off. It's one thing if this was "led" by an individual, organization, etc. but it wasn't. It was the wisdom of the crowds who played by the very same rules that the hedge funds play. > You might decide that this kind of manipulation is OK due to it's stated goals Where did every stock holder publicly state their case? If Jim Cramer says "i think you should buy AAPL" and everyone does it, is that manipulation? > How can there be any question about it? Easy. If it were illegal, who would prosecute?

Tenoke 6y ago

A SEC investigation will take time. I wouldn't judge much based on their general initial statement.

balozi 6y ago

Well... they will start by redefining "market manipulation" to encompass all activity they now consider disruptive (also suitably redefined). This is America today.

datavirtue 6y ago
This. Man walks into a hardware store and buys a Milwaukee drill. Bam, supply reduced, market manipulated.
nsonha 6y ago
Your point? Can disruptive ever be good? Other than in SV jargons?
- bradstewart 6y ago
  Good for who? Why does an event have to be good or bad?
PeterisP 6y ago
There's no need for SEC to redefine market manipulation - IMHO the "pumping" activity of at least some WSB activists would perfectly match the existing legal definition of market manipulation as written to prevent historical "boiler room" type activities. On the other hand, in these discussions I have seen a bunch of assertions that what the shorting hedge funds or HFTs are doing is "market manipulation" - now that is an attempt to redefine market manipulation to something entirely different than what it is/was.

nrmitchi 6y ago

I don't think it's fair here to assume that by "retail investors" the SEC means all retail investors. Retail is not one giant group. It is possible for one group of retail (lets say the original WSBs crowd) to take illegal action that harms other retail investors. Taking action to protect the mass of retail does not mean that all of retail is immediately in the clear.

nend 6y ago

Doesn't "retail investors" refer to any individual, non-professional, investor? Sounds like to me the SEC is warning any party involved in this, RH and WSB included.

csomar 6y ago

It's harder to pursue this if there were hundreds of thousands involved. Maybe they'll go for the people who organized this, or the one who profited massively for it. But I don't see it possible to sue a million person.

nostrademons 6y ago

Third paragraph: > In addition, we will act to protect retail investors when the facts demonstrate abusive or manipulative trading activity that is prohibited by the federal securities laws. Market participants should be careful to avoid such activity. "Market participants" here is referring to retail traders. Don't make the mistake of thinking that just because you're the little guy, you're exempt from the law. It's like how the capitol rioters were sure they were on the side of America but the FBI (and half of America) sees things very differently. A lot of government regulation is about protecting the little guy from other slightly more unscrupulous little guys. "The public" is not a monolithic entity - folks can and do screw each other over even when purporting to be part of the same mass movement.

pardonmesir 6y ago

what are you talking about? the real fraud and market manipulation was perpetrated by Robinhood and Shitadel when they shut peoples’ ability to buy the stock while still allowing it to be sold. They know this is illegal but they were betting on the fines being less than the losses. They need to be taught a real lesson. Those responsible for this intentional, flagrant violation of the most basic free market principles should go.to.jail.

deleted 6y ago
[deleted]
kapp_in_life 6y ago
If anything Robinhood allowing people to continue buying volatile assets while not being able to meet their clearing house's requirements would be something to run them afoul of the SEC.

TheAdamist 6y ago

crowd sourcing / gig working a pump n dump instead of running a boiler room operation. Just add gig work to anything and rules no longer apply.