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Statement of SEC Regarding Recent Market Volatility

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Re: Statement of SEC Regarding Recent Market Volatility

#31

Post by SpicyLemonZest »

throwaway4good wrote: post #22
gjsman-1000 wrote: post #3

"The Commission will closely review actions taken by regulated entities that may disadvantage investors or otherwise unduly inhibit their ability to trade certain securities. 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." This shoul…

"Abusive or manipulative trading activity that is prohibited by the federal securities laws." Is that aimed at "professional hedge funds" or self-proclaimed "autists" in an internet forum?

It’s aimed at both, presumably. It’s not like hedge funds have never gotten in trouble for abusive trading practices.

Re: Statement of SEC Regarding Recent Market Volatility

#32

Post by jeffbee »

OscarCunningham wrote: post #25

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.

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.

Re: Statement of SEC Regarding Recent Market Volatility

#33

Post by TeMPOraL »

ChrisRR wrote: post #29
throwaway4good wrote: post #22

Earlier quoted context omitted.

"Abusive or manipulative trading activity that is prohibited by the federal securities laws." Is that aimed at "professional hedge funds" or self-proclaimed "autists" in an internet forum?

The big traders probably have friends in high places, so I suspect they're going after WSB and not wall street who caused the issues in the first place.

With the amount of media attention WSB has been gaining, this is setting itself up for "Wall Street versus The People" situation. It may be politically tough to go against the retailers now, particularly mid-pandemic and with all the other political comorbidities US is suffering from.

Re: Statement of SEC Regarding Recent Market Volatility

#34

Post by jeffbee »

throwaway4good wrote: post #30
dls2016 wrote: post #11

What are the odds of a flash crash in the next week as a result of this activity? The system of banks and market makers and clearing houses is a always way more coupled than the the owners let on... history shows they don't know how to risk manage these sorts of situations.

In the mentioned stocks? Very high. However for the broader market; GME and friends are tiny. Ristricting trading is a way of managing risk.

The last giant crash was triggered by a single party (Bear Stearns) running out of credit. Do not underestimate the events that could follow if this volatility destabilizes a large market participant.

Re: Statement of SEC Regarding Recent Market Volatility

#35

Post by willcipriano »

jeffbee wrote: post #32
OscarCunningham wrote: post #25

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.

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.

>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?

Re: Statement of SEC Regarding Recent Market Volatility

#36

Post by dageshi »

rich_sasha wrote: post #20
dls2016 wrote: post #11

What are the odds of a flash crash in the next week as a result of this activity? The system of banks and market makers and clearing houses is a always way more coupled than the the owners let on... history shows they don't know how to risk manage these sorts of situations.

From a distance, this is all a storm in a teacup. It's a small handful of stocks, and every single one in S&P500 is waaaay bigger, in terms of trading volumes and market cap. Anything can happen, but in finance terms, this is tiny so far.

If that's the case I'm kinda confused why trading platforms keep banning trades in these particular meme stocks?

Re: Statement of SEC Regarding Recent Market Volatility

#38

Post by dls2016 »

TeMPOraL wrote: post #27
dls2016 wrote: post #11

What are the odds of a flash crash in the next week as a result of this activity? The system of banks and market makers and clearing houses is a always way more coupled than the the owners let on... history shows they don't know how to risk manage these sorts of situations.

Newest from the front lines, Freetrade (UK trading app) just blocked buy orders for US stocks... but they explicitly pin it on "a sudden and unexpected decision by our FX provider, and their bank"[0]. In another statement, they also express their deep unhappiness about it[1]. Assuming they're being honest - and I see no reason to doubt it - it's refreshing, compared to Robin Hood's communications, and more importantl…

> The "backend" of the market seems way more coupled than I imagined it is.

Exactly. Overlay this on the backdrop of a frothy, juiced up market and a bunch of angry people on their phones (I bought a few GME out of spite at $360 after considering it way back at $15)... one little push could cause the market to throw a rod, I feel. These people run the system at max RPM with minimal oil as it is.

Re: Statement of SEC Regarding Recent Market Volatility

#39

Post by throwaway4good »

ChrisRR wrote: post #29
throwaway4good wrote: post #22

Earlier quoted context omitted.

"Abusive or manipulative trading activity that is prohibited by the federal securities laws." Is that aimed at "professional hedge funds" or self-proclaimed "autists" in an internet forum?

The big traders probably have friends in high places, so I suspect they're going after WSB and not wall street who caused the issues in the first place.

I know of cases from the Danish market where the financial service authorities went for people who had tried driving the price up in a pump and dump scheme for a small penny stock. Using internet forums and a couple of trading accounts.

They made a few thousand dollars and got months in jail for it.

The problem with wsb is that it has gotten so big and there are too many involved at this point.

Re: Statement of SEC Regarding Recent Market Volatility

#40

Post by moolcool »

jeffbee wrote: post #32
OscarCunningham wrote: post #25

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.

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.

I can't find any documentation that a short squeeze is illegal. Can you?
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