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GameStop stock influencer Roaring Kitty may lose access to E-Trade, report says
- arkis22 2y agoI don't really think he'll lose access, but they are absolutely in contact with the SEC and there is a non zero chance he gets charged with market manipulation.
- cwbriscoe 2y agoFor what? Posting his position? If that is the case half of the superstonks subreddit would have to be charged.
- richbell 2y ago> If that is the case half of the superstonks subreddit would have to be charged. You could make a compelling argument that they should be. Superstonks doesn't just post their positions. They, too, try to manipulate the market by hyping up GME. I would highly recommend "This is Financial Advice" by Dan Olson to anyone not already familiar with the community. https://youtu.be/5pYeoZaoWrA https://youtu.be/5pYeoZaoWrA
- doctorpangloss 2y agoSuperstonks isn’t a parody?
- therobots927 2y agoThis is an anon account so I feel safe to admit this. I used to buy into all of that stuff. Basically the (conspiracy) theory is that market makers sold shares in GameStop that didn’t exist. There’s an element of truth to this, at least during 2021 it was confirmed that market makers had collectively sold more call options than they could possibly hedge with shares. But regardless, in order to prove this everyone in superstore started registering their shares with a transfer agent. The number of shares registered was reported by GameStop every quarter. Throughout 2022 I think the number of shares registered linearly before it plateaued at about 25% of the public number of total shares of GameStop. I might be conspiracy oriented but I’m also a believer in science and to me this cast a significant amount of doubt on the theory. Anyways, it’s definitely not a parody and I feel sorry for people who didn’t wake up like I did. I think something like 200,000 people registered their shares, that number also plateaued. I don’t think the GME craze was good for anyone but the company itself and roaring kitty.
- DANmode 2y agoThat all shareholders did not register on ComputerShare or whatever is what leads you to no longer buy into...what, precisely?
- therobots927 2y agoThe idea that the stock was being sold short with fake shares.
- CrazyStat 2y agoSelling call options is not short selling though.
- therobots927 2y agoIf you’re not hedging by buying enough shares to provide when they exercise it might as well be.
- DANmode 2y agoI followed that wrinkle pretty closely. I was surprised to hear how high the number stated was (25%). I do not see the connection between that movement achieving <100%, and there being no fraud committed in claimed assets in the finance world. Especially in that case. And I can’t, frankly, see how you drew that connection either.
- therobots927 2y agoAbsence of evidence is not evidence of absence sure. But it sure ain’t proof of anything either. If you’re going to make an outrageous claim you need to prove it.
- DANmode 2y agoThere were more shares being claimed than were owned. What more is there to prove? It's not even unusual to do. Explainer: How were more than 100% of GameStop’s shares shorted? NEW YORK, Feb 18 (Reuters) - One area of focus from a U.S. House of Representatives panel on Thursday will likely be on the role short selling played in the GameStop (GME.N), opens new tab market mayhem. Executives from trading platform Robinhood and hedge funds Melvin Capital and Citadel will be grilled following the retail-driven trading frenzy that sparked wild gyrations in GameStop and other heavily shorted stocks. Short selling, details of which are included in the memorandum, opens new tab about the hearing, can be a positive move, as it can be used in hedging positions, more accurately valuing prices of stocks and exposing frauds, like Enron and Theranos. But Vlad Tenev, broker Robinhood's chief executive officer, recently pointed out that some of the stocks involved in the "meme stock" rally were more than 100% shorted, implying that more shares were shorted than were available to trade. "I just think that's pathological," he said on the All-In Podcast, opens new tab late last Friday. "You end up with this situation that could destabilize the financial markets." HOW DOES SHORT SELLING WORK? Advertisement · Scroll to continue Typically, shorting a stock is a bet that the share price is going to fall. Short sellers borrow shares from brokers and then sell them into the market, with the agreement that they will buy the shares back and return them to the lender at an agreed upon time. The shares can come from the brokers' own inventories, or from customers that have allowed the brokers to lend out their shares. When it's time to return the shares, if the stock price has fallen, the short seller can buy the shares back at a lower price than they originally paid for them, locking in a profit. If the price has risen, the short seller must buy back the shares at the higher price, incurring a loss. In the meantime, the short seller pays the lender interest on the value of the stock, giving the lender extra income. IS IT RISKY TO LEND OUT SHARES? Not really. The borrower posts collateral, typically, opens new tab 102% of the prior day's settlement price. The borrower can also request the shares back at any time. Advertisement · Scroll to continue HOW CAN MORE THAN 100% OF A COMPANY'S SHARES BE SHORTED? Once the short seller borrows the shares from the lender and then sells them back into the market, the new owner of the shares is free to lend them out, just as the previous owner did, and have no idea they are on the other side of a short sale. Settlement time is two days after the transaction. In that time, the same shares can be lent out again, and again. This makes it possible, on paper, for more than 100% of the float of a stock to be shorted. According to financial analytics firm S3, GameStop's peak short interest was 141.8% of its float on Jan. 4. S3 argued in a recent research note that the traditional method of calculating the percentage of float is flawed because it uses stale data. U.S. investors are required to mark their shares shorted and regulators report these figures twice a month, with a 10-day delay, S3 said. There have been calls since the GameStop saga to improve transparency around short selling through more frequent reporting.
- partiallypro 2y agoThe average redditor isn't in an active position to pump and dump, as a single individual.
- lebean 2y agoIs that why?! (It's not.)
- ai_what 2y agoCare to explain why not? I can't think of anything he did besides post his position.
- cm2187 2y agoIANAL but what he is doing is very close to a pump and dump scheme, which is absolutely market manipulation. And as often with market manipulations, there is a thin and blury line between acceptable behaviour and criminal behaviour (for instance front running vs pre-hedging). An investor talking up their book isn't market manipulation, but those tacitly coordinated efforts to buy an illiquid stock to artificially raise the price seem to me fairly squarely on the wrong side of the line. The only problem being the "tacit" aspect of the strategy (kind of like mafia boss "take care of him"). This guy doesn't give a direct instruction, but clearly everyone understands his signal as an instruction.
- hanniabu 2y agoIf him just posting an image is a PnD then so is Jim Cramer, motley fool, etc telling people which stocks to buy
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- asynchronous13 2y agoIt's also worth noting that if you own above a certain percentage of a company's stock, it's legally required to make your trades public. Also interesting -- look at the trade volume during the big moves, like 3-June. There's no way retail investors are causing that much volume, especially when it's during pre-market and post-market trading hours.
- hiddencost 2y agoNo, because he has an unusually influential position and visibility. The action is evaluated in the context of its consequences.
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- StanislavPetrov 2y agoYou're right that there is a non-zero change because of the incredibly corrupt nature of the SEC and the markets. Hedge fund owners and billionaires go on social media, Bloomberg and CNBC hyping their positions all the time, how is this any different? It's different because he isn't part of the club, and worse yet, he is costing members of the club money.
- hiddencost 2y agoAgreed. We should hold Elon Musk accountable for his misconduct in terms of market manipulation and flagrant SEC violations.
- JimothyPhtevens 2y agoTo be honest, he's done worse than Keith Gill, but I consider both to be doing a public disservice. They wouldn't post their positions unless they are legally required to and/or it benefits them. Let's see Keith post his positions before he takes them if he wants to help people.
- noman-land 2y agoI don't have anything smart to say about this but I absolutely love when wacky internet handles are used in otherwise sober news reporting.
- dools 2y agoI will always have a soft spot in my heart for Jazz Randyboy https://www.theage.com.au/national/angry-cabbies-stage-sit-in-over-attack-20080430-ge70sw.html https://www.theage.com.au/national/angry-cabbies-stage-sit-i...
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- chriscappuccio 2y agoawesome
- therobots927 2y agoI’m surprised he didn’t spread his position across multiple brokers. Oh well.
- DANmode 2y agoDegen stereotypes don't come from someone's imagination.
- HaZeust 2y agoProbably because he has money stowed to fight the case in order to build case law AND make money from attorney fees and punitive damages in his prayer for relief if they try anything.
- PickledHotdog 2y agoGiven how he's handled other things, I doubt he's just using e-trafe
- tedunangst 2y agoSo there's a report by somebody reported to somebody that somebody may do something. Or maybe not.
- reportgunner 2y agoYeah may in the headline usually means won't.
- diogenescynic 2y agoMeanwhile most of Congress is day trading on insider information but the media hardly cares.
- hiddencost 2y agoWe should still nail pump and dump scammers to the wall. We should also make it illegal for members of Congress to actively invest, too.
- PickledHotdog 2y agoWhere's the proof Roaring Kitty is a pump and dump scammer? He made the connections, concocted the thesis and is now taking it to its natural conclusion. He wields enough power in his position that he doesn't need anyone to bring it about.
- Cub3 2y agoI don't understand how "Roaring Kitty" is illegally manipulating the market. What has he done / is he doing that's illegal? Can no one post on social media that they are interested in a stock?
- hiddencost 2y agoCorrect. Because he's famous, and because he's profiting off of influencing people's behavior. This is called a pump and dump scam, and is fraud. It hurts real people. It's why the regulatory framework exists, to protect naive investors from predatory ones, and ensure that misconduct doesn't overwhelm the valuable functions of the market. An old adage used to describe the law in this context: "you can be a pig, but don't be a hog".
- blindriver 2y agoWhere is the dump? Last time he held the shares for a very, very long time.
- HaZeust 2y agoIf one can't influence the price of stock due to "fame" or "influence" in and of itself, doesn't this put public.com in extraordinarily hot water [1] ? What about Unusual Whales, Quiver Quant? 1 - https://news.crunchbase.com/venture/meet-public-com-the-social-investing-app-that-will-smith-and-j-j-watt-just-put-money-in/ https://news.crunchbase.com/venture/meet-public-com-the-soci...
- realce 2y agoHow does this adage describe the law? Where is the deception and fraud explicitly? Where are the non-verifable claims made? Where is the dump? He has explained his thesis hundreds of times in public, he's following thru with that thesis, there's no surprise or rugpull.
- PickledHotdog 2y agoHow is it a pump and dump? He doesn't need anyone to do anything. He has the position and the funds to make the play himself.
- violet13 2y agoWhat's interesting to me is why this story leaked. I bet it's just Morgan Stanley (the owner of E-Trade) trying to control they narrative. If they just cut him off, he gets to tell his story, MS can't officially discuss the particulars, and the company ends up getting a lot of hate mail. But if they leak the official justification beforehand, then Roaring Kitty will have a harder time spinning it.
- wcchandler 2y agoStill haven’t found a source for the claim. That’s a red flag. And secondly, do large investment firms regularly disclose their high earning clients and their positions?
- postepowanieadm 2y agoOnly individual and ones that are annoying to their owners.
- Animats 2y agoHe's trading enough that he could use some other major brokerage.
- vessenes 2y agoI'm really enjoying Keith Gill's second coming. Of major note -- he first appeared with $53k in 2019, kicking off the original GME. His recent brokerage account shows (as of tonight assuming he didn't sell anything) something like $300mm+ of equity value. And a cost basis of like $170+mm. He has been BUSY the last four years. I'm looking forward to the second documentary. To summarize the internet speculations -- with 12mm shares sold to him through his in-the-money calls, if he chooses to exercise them, and then directly register them, he will likely create some real havoc. Meanwhile 1mm or so redditors are buying retail, options and the underlying. It should be a fun 10 days. The Gill play would be: 1. Exercise call options 2. Direct register the shares 3. Repeat. Why would this create havoc? Well, it looks pretty clear that most of these calls have been written naked, that is, someone, somewhere just left the liability for the calls on the balance sheet, and didn't, you know, buy any shares to cover them. Normally this wouldn't be a big deal -- an options trader would sell close to the bell on the 20th at prices that market makers quote as very close to the value, and there's a whole take-a-tiny-slice-for-the-service-thank-you-ma'am industry that deals with settlement and clearing. In this case, though, the stock is fairly heavily shorted. And GME retail owners speculate that a lot of phantom / fake shares are in play on the market / @ DTCC, the usual place share registries are kept for retail brokerage. So, what will happen if Mr. Gill requires what is essentially delivery of his shares through direct registration? The idea would be that the naked call writer will need to go purchase shares. Gill purchased in roughly 500k-1mm share blocks, so imagine he starts out and is like, "Thank you good sir, here's your $20mm for my 1mm shares at $20. Please send them. Today." The seller will then be like "fuck, okay, I need to go purchase 1mm shares ASAP." The proposal is that these naked call sellers will not then be able to call up DTCC and say "yo, my balance sheet is fine, please put 1mm phantom GME shares onto E-Trade's account, ref: Roaring Kitty." Instead they'll have to buy non-phantom, deliverable shares. This will push the price up. The remaining 11mm shares that are due by the other call sellers will then cost more to buy, and this will trigger additional risk considerations. These sellers may choose to buy some percentage early to cover, or they may wait. But, if they wait, Gill could again be like "I'd like my next 1mm shares, thanks". All this is business as usual, what's different here is the scale -- this is a pretty large holder, just under the SEC sizing rules where Gill would be considered an insider by virtue of his holdings alone -- and that Gill has a band of retail traders who want, more than anything, to beat the hedge funds selling these calls / doing the shorts. I'd love to see this play out as described; if it cost some major market movers a few billion dollars and killed an aggressive short or two in the process, it would be a nice "natural consequence" for some of the ways the market works against these smaller players like Gamestop, plus it's amazing theatre, where we get to cheer for a guy named "DeepFuckingValue" on reddit. Note that to the extent there's value in GME, it is in fact deep value; it comes from being a sort of whipping boy company with a failed model that was a little more resilient than expected; in 2019 it had (from memory) something like -$500mm in net income, and less than a year of cash. Now it has over $1bn in cash and is basically cashflow positive on its balance sheet yield. It still doesn't seem to have a viable retail business. But it has a weird modern form of capital - social capital. And the CEO has leveraged that into, you know, cash capital. I'm sure he's planning additional share issuance over the next few weeks to top up the coffers again. Very fun.
- dclowd9901 2y agoStripping away everything else, imagine you had a way to make a stock go up or down based on what you said. Do you think you should be able to trade? Do you think you should be able to talk? These are kind of preposterous questions but really, with so many gullible people out there, and with the market the way it is (a nebulous machine where reaction wins out), I wonder what the point of any of it is if someone like Gill can just fuck around with it by posting on Reddit.
- baby 2y agoThings should work by design, if you have to set the line somewhere it’s going to be a mess and a waste of resources
- teo_zero 2y ago> imagine you had a way to make a stock go up or down based on what you said Please add "and you are a normal citizen, not a hedge fund, not a bank", because the latter subjects are allowed to and routinely do trade and influence the market.
- friend_and_foe 2y agoOK, so imagine a world where traders don't just trade based on news and words, but based on price signals. They have bots sitting there waiting for some criteria only in the price of the target asset, and they're going to trade on that. Let's say you know about this and you know how to give them the signals they need to make their trades, so you do things to give those signals so you can profit on their activity. This world is real and you live in it. Does giving a price signal to the market count as making a stock go up or down based on what you said? Taken to it's natural conclusion, every decision every market participant makes affects the market, and every speculative participant uses these impacts as criteria for their decisions. To some degree, every single market participant, whether they want to or not, is doing both 1) impacting the market in some way, and 2) trying to find actions other people are taking that will impact the market that they can enter and benefit from. It's a big positive feedback loop. What you're talking about, taken to it's natural conclusion, is just banning trading.
- slowmovintarget 2y ago
- TeMPOraL 2y agoWay to underplay the headline. "Roaring Kitty" is no one else but /u/DeepFuckingValue - not mere "influencer", but the face and the banner behind the ol' Robinhood/GameStock trading saga - which is why I'm not surprised the trading companies got worried.
- thewanderer1983 2y agoAs of this post there is only one account that even mentions the naked shorting which kick started all of this. For those who would like a quick video rundown on understanding what happened. https://x.com/Cancelcloco/status/1790524969623175629 https://x.com/Cancelcloco/status/1790524969623175629
- elihu 2y agoI'd be curious to know what evidence there is that a lot of the original shorts never covered their positions and are still waiting for the price to collapse. Or in other words, why is he confident that the squeeze has no yet squozen.
- thewanderer1983 2y agoHere is another video going into the details. https://x.com/Cancelcloco/status/1798795323458064561?t=V5Gn_AFFveOzSHVWc_FaqA&s=19 https://x.com/Cancelcloco/status/1798795323458064561?t=V5Gn_...
- elihu 2y ago> "In 2021, Gill's social media activity on Reddit helped drive GameStop stock to historic highs. At that time, Gill encouraged others to invest in the stock—not based on the fundamentals of GameStop business but on his pure love for GameStop. The craze that he helped spark rapidly triggered temporary restrictions on GameStop trading, as well as a congressional hearing, but ultimately there were few consequences for Gill, who disappeared after making at least $30 million, the WSJ reported." That seems like a willful mischaracterization of what really happened. The thing that made GameStop share value go way up wasn't that some guy started an internet fad, it that the stock was heavily shorted and an Internet community was able to successfully take advantage of that fact. As the price went up, the shorts had to buy shares to cover their positions, and that caused the price to go up even more. It was a short squeeze. People blame Keith Gill and /r/wallstreetbets for causing the stock price to diverge from its rational value, but as I see it, it was the shorts that did that. The squeeze was just a means by which an inherently unstable and irrational market condition corrects itself. (Though I suppose it's also worth adding that at least some of the enthusiasm for buying GME was the prospect of causing hedge fund managers to soil their trousers.) https://en.wikipedia.org/wiki/GameStop_short_squeeze https://en.wikipedia.org/wiki/GameStop_short_squeeze
- voisin 2y ago> Gill encouraged others to invest in the stock—not based on the fundamentals of GameStop business but on his pure love for GameStop This is incorrect as well. He had a ton of videos about the fundamentals.
- thunky 2y ago> People blame Keith Gill and /r/wallstreetbets for causing the stock price to diverge from its rational value, but as I see it, it was the shorts that did that So you think GME was rationally valued and the shorts were wrong?
- slowmovintarget 2y agoThe shorts were trying to deliberately drive GameStop into the ground so they could cash out. It was an indirect form of the private equity shred and dump move.
- heybrendan 2y agoThings are indeed heating up when a saga that's been unfolding for over four years begins to attract attention on HN. A user or two have characterized Gill's activity as a pump-and-dump. From the article: > A common form of this fraud is a pump-and-dump scheme, where fraudsters "make false and misleading statements to create a buying frenzy, and then sell shares at the pumped-up price." Gill took a significant position in Gamestop beginning in June 2019 [1], and has been steadily increasing his position over the years (AFAICT without selling). How is the belief in the long-term recovery and turn around of what was then, a dysfunctional (and unprofitable) American retailer, anything but rather prescient and patriotic? Even if we were to concede that Gill is now in a position of influence, the suggestion that enforcement agencies should suddenly jump in and that litigation should /begin/ with him, rather than TV personalities and elected officials, strikes me as laughable. Notwithstanding the ethical and security implications of a brokerage publicly broadcasting that a customer has an account on their platform (I would be livid if this happened to me), if E-Trade were to close Gill's account, would that not be a concrete admission that his position has them vulnerable, thereby strengthening and supporting the underlying thesis? [1] https://en.wikipedia.org/wiki/Keith_Gill#Position_on_GameStop https://en.wikipedia.org/wiki/Keith_Gill#Position_on_GameSto...
- compsciphd 2y agoIs it E-Trades (or any brokers?) job to prevent a stock market manipulator from trading or is that the SEC's (or someone else's) job to do. i.e. why can't E-Trade simply refer it to the govt and have them decide. i.e. "We suspect this person is doing something illegal, but its your job to make that determination and to create the legal structure that allows us to not provide them with a service to continue doing that"? of course if it was "we know" vs "we suspect/worry" that might be different, but if they are debating if they should cut off or not, I can't believe it "we know".