Statement of SEC Regarding Recent Market Volatility • Hacker News Board

Re: Statement of SEC Regarding Recent Market Volatility

#81

Post by andreygrehov » Fri, Jan 29, 2021, 3:27 PM UTC

dageshi wrote: post #36

rich_sasha wrote: post #20

Earlier quoted context omitted.

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?

In the case of Robinhood:

> On Thursday, Robinhood was forced to stop customers from buying a number of stocks like GameStop that were heavily traded this week. To continue operating, it drew on a line of credit from six banks amounting to between $500 million and $600 million to meet higher margin, or lending, requirements from its central clearing facility for stock trades, known as the Depository Trust & Clearing Corporation.

Re: Statement of SEC Regarding Recent Market Volatility

#82

Post by bilbo0s » Fri, Jan 29, 2021, 3:27 PM UTC

SpicyLemonZest wrote: post #31

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?

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

This.

It's clear that everyone should be lawyering up depending on what positions they had when they started pumping this idea to the masses. That said, I'm a big believer in "a fool and his money". If there are hedge funds or retail investors out there who, perhaps, didn't understand all the risks of what they were doing, protecting them from their folly only causes more problems in the future.

As horrible as this sounds, now is the time to let everyone fail. Hard. If we don't, no lessons will be learned.

Re: Statement of SEC Regarding Recent Market Volatility

#83

Post by jeffbee » Fri, Jan 29, 2021, 3:28 PM UTC

ericmay wrote: post #62

jeffbee wrote: post #32

Earlier quoted context omitted.

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.

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 mani…

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.

Re: Statement of SEC Regarding Recent Market Volatility

#84

Post by RHSeeger » Fri, Jan 29, 2021, 3:28 PM UTC

jeffbee wrote: post #61

Dirlewanger wrote: post #53

Earlier quoted context omitted.

Ever think that they just like the stock?

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!

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".

Re: Statement of SEC Regarding Recent Market Volatility

#85

Post by acover » Fri, Jan 29, 2021, 3:28 PM UTC

ericmay wrote: post #62

jeffbee wrote: post #32

Earlier quoted context omitted.

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.

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 mani…

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

Edit: litigated to settled

Re: Statement of SEC Regarding Recent Market Volatility

#86

Post by dls2016 » Fri, Jan 29, 2021, 3:29 PM UTC

acover wrote: post #72

rich_sasha wrote: post #20

Earlier quoted context omitted.

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.

The issue isn't GME market cap vs the S&P 500. It's that the clearing houses, exchanges and other intermediaries that guarantee every trade may go bankrupt due to the $15+ billion loss on options that they may have to cover.

Yeah everyone says short sales have "infinite loss potential", but at some point the lender will recognize that those shares aren't coming back.

Re: Statement of SEC Regarding Recent Market Volatility

#87

Post by nsonha » Fri, Jan 29, 2021, 3:29 PM UTC

balozi wrote: post #46

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.

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

Your point? Can disruptive ever be good? Other than in SV jargons?

Re: Statement of SEC Regarding Recent Market Volatility

#88

Post by kshacker » Fri, Jan 29, 2021, 3:29 PM UTC

qmmmur wrote: post #77

jeffbee wrote: post #32

Earlier quoted context omitted.

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.

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?

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.

Re: Statement of SEC Regarding Recent Market Volatility

#89

Post by lm28469 » Fri, Jan 29, 2021, 3:29 PM UTC

jeffbee wrote: post #34

throwaway4good wrote: post #30

Earlier quoted context omitted.

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.

> The last giant crash was triggered by a single party (Bear Stearns) running out of credit.

It was waaaaaay more complex than that, the Bear Stearns thing was one of many worldwide symptoms (not cause) of a widespread problem.

There is nothing to compare between this GME event and 2008 crisis (even though there are plenty of other issues that could lead to one)

https://en.wikipedia.org/wiki/Financial_crisis_of_2007–2008

Re: Statement of SEC Regarding Recent Market Volatility

#90

Post by mrkramer » Fri, Jan 29, 2021, 3:29 PM UTC

TeMPOraL wrote: post #33

ChrisRR wrote: post #29

Earlier quoted context omitted.

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.

This is not about "Wall Street versus The People" or WallStreet vs Retail (small investors) it is about federal securities laws. And you know where the law is? In court. I think court needs to decide whether what is WSB doing illegal or legal.