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I also believed that most of the shorts were naked, but the director of S3partner clearly explained how this was not the case. One stock can be shorted multipl

I also believed that most of the shorts were naked, but the director of S3partner clearly explained how this was not the case. One stock can be shorted multiple times which is what causes the SI% to be over 100%. A lends to B, B sells to C, C lends to D and so forth. Two shorters (B,D) but only 1 original stock. And Robinhoods closure of the trade seems reasonable in retrospect as well. If the clearing house required a higher collateral to clear trades on those tickers due to their volatility and RH did not have the liquidity to provide it then blocking the purchase of those tickers seems fair. I can't really see anything illegal about the actions of the traders or the brokerages like Robinhood and Webull.

adriancr 6y ago
You can get more the 100% without naked shorts, sure, but is that legal?, does SEC allow that?, nobody is concerned that if there is a short squeeze there is no chance in hell to close out? (like we are seeing here) The point I tried to make was - this short was done to drive price down to zero (it can do that with that large of a position) in collusion with negative media reports from friends... That is manipulation. And they got caught with their pants down. I'm also not convinced on no naked shorts, we'll see... As for robinhoods closure of trade, they only disabled buy, not sale... as for reason, are you speculating? I did not see any clearing house comment. This was brought up by Cuomo as well in interview. As for illegal on robinhoods part, we'll see, there will likely be an investigation. Especially since they are owned by the company that bailed Melvin Capital out.
- andylei 6y ago
  > You can get more the 100% without naked shorts, sure, but is that legal?, does SEC allow that? Yes. As someone lending out a share (for someone else to short), you can't know whether the person you bought it from had borrowed it to sell it to you. Let's say you bought a share of stock. Can you lend it to someone for them to short sell? Of course. You own the share, regardless of how many people it passed through to get to you.
- realmod 6y ago
  The same director noted that the SI%, according to their way of calculating*, is actually at 55% (still very high). And like the poster below stated, one cannot really know the difference between a borrowed and "ordinary" stock . Webull came out and clearly stated that their clearinghouse had issues with putting up collateral for the tickers and thus had to shut them down [0]. And while Robinhood has not come out directly and said it was due to liquidity, one can easily gather that from the statements they put out, the new funding they needed, and lastly the fact that DTCC required higher collateral for those tickers. [0] https://www.wsj.com/articles/gamestop-trading-restrictions-blamed-on-wall-streets-clearing-firm-by-online-broker-11611867105 https://www.wsj.com/articles/gamestop-trading-restrictions-b... * It includes all tradeable share. So in the case of the example, normal SI% states 2:1, two shorters and one original share. Their way is 2:3 which is, 2 shorters (B,D) and 3 longs (A,C,E)
  - adriancr 6y ago
    > And while Robinhood has not come out directly So you were speculating on robinhood reason. > The same director noted that the SI%, according to their way of calculation, is actually at 55% Thanks, I'll check that out, weird since there are contradicting stories likely due to that short positions are not disclosed.
- UncleMeat 6y ago
  Imagine an alternative universe. WSB decides that shorting some company they hate is a good idea. But wait, it has already been shorted up to 99% by hedge funds! No more shorting allowed. SEC rules. Same backlash about a "rigged" system.
  - adriancr 6y ago
    You are aware everyone else except retail was allowed to buy right? You are aware hedge funds did just that after doing wash sales to trigger stop losses. It was funny at one point bid ask spread was 120-5000
    - UncleMeat 6y ago
      Yes that's what I'm saying. The same narrative ("wtf, they are allowed to short but I'm not") arises in my scenario.
      - adriancr 6y ago
        your scenario means everyone is disallowed from shorting. Equal measure to market condition. You see it being different from disallowing just retail buying? Oh and that already exists when there are no shares to borrow. (in theory as they can naked short)
seabird 6y ago
I'm not a domain expert, but it would seem that whether or not something was sold naked is ultimately determined in the instant that you are obligated to deliver -- not doing so is a Failure to Deliver, which is when your problem actually starts. The SEC has 170k recorded FTDs for GME in the second half of December 2020: https://www.sec.gov/data/foiadocsfailsdatahtm https://www.sec.gov/data/foiadocsfailsdatahtm GME has been on the NYSE Threshold list for months: https://www.nyse.com/regulation/threshold-securities https://www.nyse.com/regulation/threshold-securities Multiple WSB users were aware of this public data and that GME had high FTD rates in significantly more favourable circumstances at least as early as October 2020: https://old.reddit.com/r/wallstreetbets/comments/j0ckgf/reg_sho_list_update/ https://old.reddit.com/r/wallstreetbets/comments/j0ckgf/reg_... https://old.reddit.com/r/wallstreetbets/comments/jbvwek/failstodeliver_data_is_out_gme/ https://old.reddit.com/r/wallstreetbets/comments/jbvwek/fail... There was no reason to not be ass-naked or close to it on the high end of GME call contract writing a few months ago. They've probably covered (at least partially) by now, but that doesn't mean it hasn't happened.
- andylei 6y ago
  > I'm not a domain expert, but it would seem that whether or not something was sold naked is ultimately determined in the instant that you are obligated to deliver No, this is not true. When you sell short (with some exceptions for market makers), you are obligated to "find" shares to borrow (called "locates"). Usually your broker arranges this; any shares that you borrow cannot be lent to someone else. If you do not have any borrowed shares (as recorded by the broker), that is considered a "naked short sell".
  - adriancr 6y ago
    > you are obligated to "find" shares to borrow Unless you know... you just dont. Or you are big enough to have an exception. Whats the punishment?, how will they find you? (you dont need to disclose shorts)
    - realmod 6y ago
      E.g. A lends a share to B, B sells to C, C lends to D. Now say another shorter, X, needs to cover their short and thus buys a share from C, now for this trade to settle C has to recall their share from D and then give it to X, who would then use it to cover their short. If D now fails to give back the share to C, then the trade between C-D is FTD which would then cause X trade with its borrower to be FTD since X needs C's share to settle it. So they could have locates but still fail to settle. Though, I'm not unequivocally excluding that some naked shorts may have happened. I just find it more plausible than hedge funds and brokerages allowing huge amounts of naked shorts, which are already illegal.

adriancr 6y ago

You can get more the 100% without naked shorts, sure, but is that legal?, does SEC allow that?, nobody is concerned that if there is a short squeeze there is no chance in hell to close out? (like we are seeing here) The point I tried to make was - this short was done to drive price down to zero (it can do that with that large of a position) in collusion with negative media reports from friends... That is manipulation. And they got caught with their pants down. I'm also not convinced on no naked shorts, we'll see... As for robinhoods closure of trade, they only disabled buy, not sale... as for reason, are you speculating? I did not see any clearing house comment. This was brought up by Cuomo as well in interview. As for illegal on robinhoods part, we'll see, there will likely be an investigation. Especially since they are owned by the company that bailed Melvin Capital out.

andylei 6y ago
> You can get more the 100% without naked shorts, sure, but is that legal?, does SEC allow that? Yes. As someone lending out a share (for someone else to short), you can't know whether the person you bought it from had borrowed it to sell it to you. Let's say you bought a share of stock. Can you lend it to someone for them to short sell? Of course. You own the share, regardless of how many people it passed through to get to you.
realmod 6y ago
The same director noted that the SI%, according to their way of calculating*, is actually at 55% (still very high). And like the poster below stated, one cannot really know the difference between a borrowed and "ordinary" stock . Webull came out and clearly stated that their clearinghouse had issues with putting up collateral for the tickers and thus had to shut them down [0]. And while Robinhood has not come out directly and said it was due to liquidity, one can easily gather that from the statements they put out, the new funding they needed, and lastly the fact that DTCC required higher collateral for those tickers. [0] https://www.wsj.com/articles/gamestop-trading-restrictions-blamed-on-wall-streets-clearing-firm-by-online-broker-11611867105 https://www.wsj.com/articles/gamestop-trading-restrictions-b... * It includes all tradeable share. So in the case of the example, normal SI% states 2:1, two shorters and one original share. Their way is 2:3 which is, 2 shorters (B,D) and 3 longs (A,C,E)
- adriancr 6y ago
  > And while Robinhood has not come out directly So you were speculating on robinhood reason. > The same director noted that the SI%, according to their way of calculation, is actually at 55% Thanks, I'll check that out, weird since there are contradicting stories likely due to that short positions are not disclosed.
UncleMeat 6y ago
Imagine an alternative universe. WSB decides that shorting some company they hate is a good idea. But wait, it has already been shorted up to 99% by hedge funds! No more shorting allowed. SEC rules. Same backlash about a "rigged" system.
- adriancr 6y ago
  You are aware everyone else except retail was allowed to buy right? You are aware hedge funds did just that after doing wash sales to trigger stop losses. It was funny at one point bid ask spread was 120-5000
  - UncleMeat 6y ago
    Yes that's what I'm saying. The same narrative ("wtf, they are allowed to short but I'm not") arises in my scenario.
    - adriancr 6y ago
      your scenario means everyone is disallowed from shorting. Equal measure to market condition. You see it being different from disallowing just retail buying? Oh and that already exists when there are no shares to borrow. (in theory as they can naked short)

seabird 6y ago

I'm not a domain expert, but it would seem that whether or not something was sold naked is ultimately determined in the instant that you are obligated to deliver -- not doing so is a Failure to Deliver, which is when your problem actually starts. The SEC has 170k recorded FTDs for GME in the second half of December 2020: https://www.sec.gov/data/foiadocsfailsdatahtm https://www.sec.gov/data/foiadocsfailsdatahtm GME has been on the NYSE Threshold list for months: https://www.nyse.com/regulation/threshold-securities https://www.nyse.com/regulation/threshold-securities Multiple WSB users were aware of this public data and that GME had high FTD rates in significantly more favourable circumstances at least as early as October 2020: https://old.reddit.com/r/wallstreetbets/comments/j0ckgf/reg_sho_list_update/ https://old.reddit.com/r/wallstreetbets/comments/j0ckgf/reg_... https://old.reddit.com/r/wallstreetbets/comments/jbvwek/failstodeliver_data_is_out_gme/ https://old.reddit.com/r/wallstreetbets/comments/jbvwek/fail... There was no reason to not be ass-naked or close to it on the high end of GME call contract writing a few months ago. They've probably covered (at least partially) by now, but that doesn't mean it hasn't happened.

andylei 6y ago
> I'm not a domain expert, but it would seem that whether or not something was sold naked is ultimately determined in the instant that you are obligated to deliver No, this is not true. When you sell short (with some exceptions for market makers), you are obligated to "find" shares to borrow (called "locates"). Usually your broker arranges this; any shares that you borrow cannot be lent to someone else. If you do not have any borrowed shares (as recorded by the broker), that is considered a "naked short sell".
- adriancr 6y ago
  > you are obligated to "find" shares to borrow Unless you know... you just dont. Or you are big enough to have an exception. Whats the punishment?, how will they find you? (you dont need to disclose shorts)
  - realmod 6y ago
    E.g. A lends a share to B, B sells to C, C lends to D. Now say another shorter, X, needs to cover their short and thus buys a share from C, now for this trade to settle C has to recall their share from D and then give it to X, who would then use it to cover their short. If D now fails to give back the share to C, then the trade between C-D is FTD which would then cause X trade with its borrower to be FTD since X needs C's share to settle it. So they could have locates but still fail to settle. Though, I'm not unequivocally excluding that some naked shorts may have happened. I just find it more plausible than hedge funds and brokerages allowing huge amounts of naked shorts, which are already illegal.