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You’re absolutely right. A short squeeze in and of itself is absolutely not market manipulation. Sometimes it just happens. But creating a short squeeze can be

You’re absolutely right. A short squeeze in and of itself is absolutely not market manipulation. Sometimes it just happens. But creating a short squeeze can be market manipulation. > "Market manipulation" itself is not necessarily illegal, if you just mean doing things that will effect the market in a way to bring profit to yourself. I’m not quite sure what you mean by this. Market manipulation is a concerted (and sometimes coordinated) effort to artificially influence the supply or demand of a security. Market manipulation often relies on false information but false information is not at all a required element of market manipulation. Where things get interesting (and fuzzy) here that I’m not quite sure where the line is between a group working together to influence the market and just... the market. I suppose its theoretically possible for everyone in the market to coordinate against one or a few players. To my knowledge there’s never been a situation with such a large coordinated effort. That said, there are definitely a handful of individuals on WSB who got the ball rolling and have profited heavily. I definitely think the SEC could make the case they've violated the Exchange Act and potentially the '33 Act depending on what % of $GME the group controlled.

mlthoughts2018 6y ago
I’m sorry but you have written several blowhard comments along these lines and it’s just wrong. There is no such thing as “creating” a short squeeze. There is just a buying strategy based on hard work of appraising the fundamentals and speculating correctly, and you are perfectly free to tell others you plan to do that and coordinate with them. Calling anything the retail / WSB investor crowd did in this scenario “manipulation” is ridiculous and insulting. “Coordinating” by explaining a strategy and inviting others to participate is not “manipulation.”
- elliekelly 6y ago
  Well I'm a securities lawyers soooo I kind of know a thing or two about this stuff. I stand by everything I've said. If that makes a stranger on the internet think I'm a "blowhard", so be it. Apologies if reality hurts your feelings. Nothing I've said is wrong. Many things you've said are, though. Oh, and you might want to google Phil Falcone.
  - mlthoughts2018 6y ago
    If true, I’m quite shocked just based on the bald-faced, zeroth order flagrant incorrectness of things you wrote in other comments about it. I worked as a fund manager at an asset management firm for a few years, often sitting daily with our general counsel on many issues. Nothing you have said about this, including the totally off the wall comparison with Phil Falcone, causes me to believe your take is trustworthy here. I’m not a lawyer, but just because you allegedly are one doesn’t mean I’m going to take your opinion on this at face value.
    - elliekelly 6y ago
      Prepare to be quite shocked, bud. I'm still waiting for you to point out what exactly I've said that's wrong. Since your comments are full of angry rhetoric and lacking in substance it seems that you strongly dislike what I've said which is actually very different from what I've said being "flagrantly incorrect". Classic mixup. > often sitting daily with our general counsel on many issues I think you think this somehow bolsters your (again, completely emotional) argument? On the contrary, this is a pretty good indicator you don't understand federal securities laws. And I must say, I concur with your former GC's assessment.
      - mlthoughts2018 6y ago
        > “I'm still waiting for you to point out what exactly I've said that's wrong.” I don’t know why you’re waiting on that. It’s absolutely not my job to go item by item through the comments and chronicle it for you, that’s on you if you care (or don’t, I don’t care, and I won’t be baited further). I just felt somebody needed to mention that they don’t take what you’re saying as accurate or trustworthy.
        nrmitchi 6y ago
        If you are making a claim that everything someone is saying is wrong, you should will be willing to state what you think they are actually wrong about, and why. No one is asking you to "go line by line", but right now you're just yelling "YOU'RE WRONG I'M RIGHT" without even specifying what you're talking about.
- nrmitchi 6y ago
  > buying strategy based on hard work of appraising the fundamentals and speculating correctly I'm sorry are you trying to make an argument that GME right now is based on evaluating the fundamentals?!? > “Coordinating” by explaining a strategy and inviting others to participate is not “manipulation.” Frankly, you're kind of right, if the premises of those strategies are valid, and are not "If we manipulate the value high enough", then it is not illegal market manipulation. If the premise of your strategy is "manipulating the price of availability", then yes, it is. If the strategy is just blatantly factually wrong or fraudulent, then yes, it is.
  - mlthoughts2018 6y ago
    > “ I'm sorry are you trying to make an argument that GME right now is based on evaluating the fundamentals?!?” I’m saying the author of the article (the reddit post) approached valuing it based on fundamentals. That is the whole point of a short equity squeeze - a stock’s valuation is predicted by many (wrong folks) to fall, institutional money takes a large short position, but a few smart speculators see a valuation-based reason why the price will actually (truly, not artificially) go up, thus squeezing the short sellers. The strategy kicks in only at that point, when buying and holding (based on speculating more intelligently about the true valuation) leads to further gains because of the short sellers’ situation. The reddit author even says explicitly - this is not a pump and dump, the stock will stay high. Sharing a smart analysis and offering others the chance to execute the same strategy is not manipulation. It’s just a smart strategy. This guy and others who saw the opportunity early, realized GME was both fundamentally undervalued and also had super high short interest, just out-smarted professional traders and they are mad, so resorting to backchannel politics to drum up claims of “manipulation.”
    - nrmitchi 6y ago
      > The reddit author even says explicitly - this is not a pump and dump, the stock will stay high. Oh well I mean if the reddit author said it.... If you're arguing that it will stay high, you're saying that based on the fundamentals of the company GameStop should be a $20B company. Which is bonkers.
jrochkind1 6y ago
From the investopedia article: "Contrarian investors may buy stocks with heavy short interest in order to exploit the potential for a short squeeze" Are you suggesting that is illegal? And are you suggesting something diferrent than that happened here? If so, what made it different?
- nrmitchi 6y ago
  My understanding is: > exploit the potential for a short squeeze Not illegal. > Take action with the explicit intent to cause a short squeeze Yes illegal. Context matters though as to which side a given situation might come down on.
  - deleted 6y ago
    [deleted]
  - jrochkind1 6y ago
    The weird thing here is that buying the shares themselves to exploit the potential for the short squeeze, in itself makes a short squeeze more likely, no? But yeah, it's possible if you have that intent in your mind, somehow it makes it illegal, the laws don't always make sense and I'm not an expert here. I am pretty confident that large traders do this all the time though, have the intent to cause a short squeeze. But I wouldn't be shocked if there's something illegal that traders do all the time anyway (without advertising it on the internet!).
    - loopz 6y ago
      For rich people it is often just fat fingers. At that much money, you can't help but step on someone's toes. For millions of manic amateurs, it's mania and collusion. The planning of it is evidence. So become rich, before you break laws, seems to be the moral hazard here.
Majromax 6y ago
> Where things get interesting And when a lawyer says "interesting," they mean "expensive." > Where things get interesting (and fuzzy) here that I’m not quite sure where the line is between a group working together to influence the market and just... the market. I think it's also noteworthy here that the short interest was at least initially over 100%. That's a powder keg; you don't "create" a short squeeze in that environment so much as just wait for any random spark to cause one. If it comes down to the SEC prosecuting individual members of WSB (where they can't prove misrepresentation), I think there will also be substantial first amendment arguments at play. One recent rallying call of the bubble has been to buy and hold GME stock as a protest against hedge funds / the stock market as a whole, and on the face of things that's political protest. The SEC isn't in the business of investigating other politically motivated stock boycotts, so a politically-motivated stock purchase should also be treated with kid gloves. > That said, there are definitely a handful of individuals on WSB who got the ball rolling and have profited heavily. From what I can tell, RoaringKitty/DFV is less likely to be a target of a market manipulation charge because their arguments were made well over a year ago and were ultimately ones of value; the profit did not depend on causing a short squeeze, and DFV in fact took profit from a large portion of their initial stake by the end of 2020 (before the squeeze). The linked post is more direct in "these purchases will cause a short squeeze," so it could more credibly be called manipulation. But again, the powder keg makes the analysis weirder.
- elliekelly 6y ago
  I actually agree about RoaringKitty/DeepFuckingValue. From what I've seen none of his posts or comments were at all encouraging or even insinuating that others should follow his lead. His YouTube channel even has a disclaimer video. In an ideal world he'd include that disclaimer at the beginning and end of every video but the fact that he has one at all at least demonstrates he's thought about the potential market implications and taken steps to make sure his followers don't take his commentary the wrong way. I'm actually a bit curious if DFV will be hired as a PM by a hedge fund when the dust settles. I don't think GME is the first time his thesis has paid off. But the people saying things like "buy GME and call your broker to instruct them not to lend your shares" or encouraging people to go "all in" and the comments specifically encouraging others to buy GME to screw $hedgeFund have left a pretty clear paper trail of their intent to induce others to purchase and manipulate the market.
DennisP 6y ago
Would it be fair to say that people who just read these posts and bought the stock (or calls) are completely in the clear? Would things get fuzzier if just one person bought $100K worth, which the post claims would be sufficient to trigger a squeeze? (Just asking theoretically, I'm not a participant :)

mlthoughts2018 6y ago

I’m sorry but you have written several blowhard comments along these lines and it’s just wrong. There is no such thing as “creating” a short squeeze. There is just a buying strategy based on hard work of appraising the fundamentals and speculating correctly, and you are perfectly free to tell others you plan to do that and coordinate with them. Calling anything the retail / WSB investor crowd did in this scenario “manipulation” is ridiculous and insulting. “Coordinating” by explaining a strategy and inviting others to participate is not “manipulation.”

elliekelly 6y ago
Well I'm a securities lawyers soooo I kind of know a thing or two about this stuff. I stand by everything I've said. If that makes a stranger on the internet think I'm a "blowhard", so be it. Apologies if reality hurts your feelings. Nothing I've said is wrong. Many things you've said are, though. Oh, and you might want to google Phil Falcone.
- mlthoughts2018 6y ago
  If true, I’m quite shocked just based on the bald-faced, zeroth order flagrant incorrectness of things you wrote in other comments about it. I worked as a fund manager at an asset management firm for a few years, often sitting daily with our general counsel on many issues. Nothing you have said about this, including the totally off the wall comparison with Phil Falcone, causes me to believe your take is trustworthy here. I’m not a lawyer, but just because you allegedly are one doesn’t mean I’m going to take your opinion on this at face value.
  - elliekelly 6y ago
    Prepare to be quite shocked, bud. I'm still waiting for you to point out what exactly I've said that's wrong. Since your comments are full of angry rhetoric and lacking in substance it seems that you strongly dislike what I've said which is actually very different from what I've said being "flagrantly incorrect". Classic mixup. > often sitting daily with our general counsel on many issues I think you think this somehow bolsters your (again, completely emotional) argument? On the contrary, this is a pretty good indicator you don't understand federal securities laws. And I must say, I concur with your former GC's assessment.
    - mlthoughts2018 6y ago
      > “I'm still waiting for you to point out what exactly I've said that's wrong.” I don’t know why you’re waiting on that. It’s absolutely not my job to go item by item through the comments and chronicle it for you, that’s on you if you care (or don’t, I don’t care, and I won’t be baited further). I just felt somebody needed to mention that they don’t take what you’re saying as accurate or trustworthy.
      - nrmitchi 6y ago
        If you are making a claim that everything someone is saying is wrong, you should will be willing to state what you think they are actually wrong about, and why. No one is asking you to "go line by line", but right now you're just yelling "YOU'RE WRONG I'M RIGHT" without even specifying what you're talking about.
nrmitchi 6y ago
> buying strategy based on hard work of appraising the fundamentals and speculating correctly I'm sorry are you trying to make an argument that GME right now is based on evaluating the fundamentals?!? > “Coordinating” by explaining a strategy and inviting others to participate is not “manipulation.” Frankly, you're kind of right, if the premises of those strategies are valid, and are not "If we manipulate the value high enough", then it is not illegal market manipulation. If the premise of your strategy is "manipulating the price of availability", then yes, it is. If the strategy is just blatantly factually wrong or fraudulent, then yes, it is.
- mlthoughts2018 6y ago
  > “ I'm sorry are you trying to make an argument that GME right now is based on evaluating the fundamentals?!?” I’m saying the author of the article (the reddit post) approached valuing it based on fundamentals. That is the whole point of a short equity squeeze - a stock’s valuation is predicted by many (wrong folks) to fall, institutional money takes a large short position, but a few smart speculators see a valuation-based reason why the price will actually (truly, not artificially) go up, thus squeezing the short sellers. The strategy kicks in only at that point, when buying and holding (based on speculating more intelligently about the true valuation) leads to further gains because of the short sellers’ situation. The reddit author even says explicitly - this is not a pump and dump, the stock will stay high. Sharing a smart analysis and offering others the chance to execute the same strategy is not manipulation. It’s just a smart strategy. This guy and others who saw the opportunity early, realized GME was both fundamentally undervalued and also had super high short interest, just out-smarted professional traders and they are mad, so resorting to backchannel politics to drum up claims of “manipulation.”
  - nrmitchi 6y ago
    > The reddit author even says explicitly - this is not a pump and dump, the stock will stay high. Oh well I mean if the reddit author said it.... If you're arguing that it will stay high, you're saying that based on the fundamentals of the company GameStop should be a $20B company. Which is bonkers.

jrochkind1 6y ago

From the investopedia article: "Contrarian investors may buy stocks with heavy short interest in order to exploit the potential for a short squeeze" Are you suggesting that is illegal? And are you suggesting something diferrent than that happened here? If so, what made it different?

nrmitchi 6y ago
My understanding is: > exploit the potential for a short squeeze Not illegal. > Take action with the explicit intent to cause a short squeeze Yes illegal. Context matters though as to which side a given situation might come down on.
- deleted 6y ago
  [deleted]
- jrochkind1 6y ago
  The weird thing here is that buying the shares themselves to exploit the potential for the short squeeze, in itself makes a short squeeze more likely, no? But yeah, it's possible if you have that intent in your mind, somehow it makes it illegal, the laws don't always make sense and I'm not an expert here. I am pretty confident that large traders do this all the time though, have the intent to cause a short squeeze. But I wouldn't be shocked if there's something illegal that traders do all the time anyway (without advertising it on the internet!).
  - loopz 6y ago
    For rich people it is often just fat fingers. At that much money, you can't help but step on someone's toes. For millions of manic amateurs, it's mania and collusion. The planning of it is evidence. So become rich, before you break laws, seems to be the moral hazard here.

Majromax 6y ago

> Where things get interesting And when a lawyer says "interesting," they mean "expensive." > Where things get interesting (and fuzzy) here that I’m not quite sure where the line is between a group working together to influence the market and just... the market. I think it's also noteworthy here that the short interest was at least initially over 100%. That's a powder keg; you don't "create" a short squeeze in that environment so much as just wait for any random spark to cause one. If it comes down to the SEC prosecuting individual members of WSB (where they can't prove misrepresentation), I think there will also be substantial first amendment arguments at play. One recent rallying call of the bubble has been to buy and hold GME stock as a protest against hedge funds / the stock market as a whole, and on the face of things that's political protest. The SEC isn't in the business of investigating other politically motivated stock boycotts, so a politically-motivated stock purchase should also be treated with kid gloves. > That said, there are definitely a handful of individuals on WSB who got the ball rolling and have profited heavily. From what I can tell, RoaringKitty/DFV is less likely to be a target of a market manipulation charge because their arguments were made well over a year ago and were ultimately ones of value; the profit did not depend on causing a short squeeze, and DFV in fact took profit from a large portion of their initial stake by the end of 2020 (before the squeeze). The linked post is more direct in "these purchases will cause a short squeeze," so it could more credibly be called manipulation. But again, the powder keg makes the analysis weirder.

elliekelly 6y ago
I actually agree about RoaringKitty/DeepFuckingValue. From what I've seen none of his posts or comments were at all encouraging or even insinuating that others should follow his lead. His YouTube channel even has a disclaimer video. In an ideal world he'd include that disclaimer at the beginning and end of every video but the fact that he has one at all at least demonstrates he's thought about the potential market implications and taken steps to make sure his followers don't take his commentary the wrong way. I'm actually a bit curious if DFV will be hired as a PM by a hedge fund when the dust settles. I don't think GME is the first time his thesis has paid off. But the people saying things like "buy GME and call your broker to instruct them not to lend your shares" or encouraging people to go "all in" and the comments specifically encouraging others to buy GME to screw $hedgeFund have left a pretty clear paper trail of their intent to induce others to purchase and manipulate the market.

DennisP 6y ago

Would it be fair to say that people who just read these posts and bought the stock (or calls) are completely in the clear? Would things get fuzzier if just one person bought $100K worth, which the post claims would be sufficient to trigger a squeeze? (Just asking theoretically, I'm not a participant :)