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Statement of SEC Regarding Recent Market Volatility

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Re: Statement of SEC Regarding Recent Market Volatility

#461

Post by fatsdomino001 »

xster wrote: post #237
tompccs wrote: post #212

Earlier quoted context omitted.

I am so sick of this 'stay in your lane' attitude. Time and time again, experts have been shown to have consensus opinions which are wildly off from reality. You can almost set your watch to how often an outsider will analyse a situation from first principles and make money off the 'experts', especially in the stock market. You're welcome to your opinion but this appeal to authority is seriously wearing thin. Pretty…

This seems like a strawman. The OP isn't arguing against outsider/non-expert discussion. He's just satirizing HN's specific tendencies to spin off of a headline/article first glance into a let-me-teach-you-something fan fiction vs fan fiction argument.

That's a tendency for all headlines/articles, not just those on HN

Re: Statement of SEC Regarding Recent Market Volatility

#462

Post by CTDOCodebases »

acover wrote: post #85
ericmay wrote: post #62

Earlier quoted context omitted.

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

It could be argued that r/wallstreetbets is a public forum. Anyone can join. Think of it like a virtual conference room.

If I walk into this room and yell “Everybody buy GME to screw the hedge funds” am I engaging in market manipulation? There is no formal or informal agreement to do so if someone says “ok great idea” and go buys GME.

Besides how are they going to enforce the laws? Match IPs to ISPs and extradite all the thousands if not millions of people across the world who bough stock? If a fine is issued do they just divide it up by the number of people who commented in wallstreetbets and held stock? Or is every person fined individually?

How is this worse than the sell walls that hedge funds use to deflate a share price?

The truth of the matter is the SEC dropped the ball. They were probably too busy having a wank while on pornhub [0].

In December as soon as the share price started to rise GME was placed on the NYSE threshold securities list for large numbers of “failure to deliver”. Keep in mind it had entered this same list earlier in the year. Followers of wallstreetbets were suspicious and believed that illegal naked short selling was occurring so they informed the SEC [1].

Then a few weeks later the stock rose 10% then 50% the next day leaving the call options ITM on a Friday afternoon. What did the SEC do? They sat on their hands over the weekend instead of suspending trading of the stock and performing an investigation.

[0] https://abcnews.go.com/amp/GMA/sec-pornography-employees-spe... [1] https://www.reddit.com/r/wallstreetbets/comments/kr98ym/gme_...

Re: Statement of SEC Regarding Recent Market Volatility

#463

Post by rich_sasha »

jiofih wrote: post #291
acover wrote: post #72

Earlier quoted context omitted.

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.

Why do clearing houses have to cover losses, isn’t it the options seller on the other side that takes it?

Clearing houses cover any shortage of money due to one party not paying up. So if someone sells an option on an exchange, then doesn't pony up, the clearing house must. And if too many people don't pony up, the clearing house is in trouble.

Except it is far more complicated. Does Robin Hood allow the selling options? That would seem ridiculously stupid if it does, but let's say yes. The clearing house has nothing to do with the seller, or in fact probably with Robin Hood. It will be dealing with Robin Hood's dealer, probably a big bank (think JP Morgan or the like), and there's a cascade of who-owes-who.

Robin Hood clients ought to pay to Robin Hood if they owe money on short options, but if they fail, then Robin Hood must cover that to the broker. The broker wants to make sure it doesn't lose any money on trading with Robin Hood, because if it does, it still needs to make good to the exchange. And only if the broker fails, then the clearing house gets involved.

If you can only buy options on Robin Hood (or, in any case, cannot be short), then there isn't much of an issue there. The issue would arise if the broker cannot pay the option payouts, but that's very unlikely. Banks deal with option trading all the time, and spend lots of money on hedging their exposure to the underlying stock. This is essentially a solved problem, and the scale of what's going on is way too small to stress that.

Re: Statement of SEC Regarding Recent Market Volatility

#464

Post by whimsicalism »

Robotbeat wrote: post #435
tootie wrote: post #250

Earlier quoted context omitted.

As has been stated elsewhere, it is easier to recover from alienating customers than it is from running afoul of the SEC. They ran a very real risk of being forcibly shut down by regulators if they didn't slow trading.

I don’t agree. See Tesla. Elon frakked up with the SEC but not his customers (or his fans) and so Tesla a couple years later is on top of the world. I doubt Robinhood will survive this. They built their whole brand around rallying for the little guy at the expense of the fat cats. It’s literally their name.

That's an absolutely awful argument. Elon Musk rich so don't have to bother with the SEC?

Re: Statement of SEC Regarding Recent Market Volatility

#465

Post by lixtra »

maxfurman wrote: post #434
josephorjoe wrote: post #232

Earlier quoted context omitted.

It is completely clear that they betrayed their customers' trust. I know some people think "but that's not illegal so they did nothing wrong". Those people are bad and should feel bad. And I think in this case enough customers are angry that robinhood will not escape the consequences of its actions. I only said I would be unsurprised to learn they acted illegally. I admit the "suck at lying" thing is more my opinion…

Do Robinhood's terms guarantee that their users can buy any stock at any time? Does Robinhood in any way ask or imply that their users cannot use another service? I'm just not sure what trust they betrayed here.

Trust is not covered by terms.

Re: Statement of SEC Regarding Recent Market Volatility

#466

Post by franklampard »

FabHK wrote: post #374
acegopher wrote: post #14

Earlier quoted context omitted.

No. WSB is not "a regulated entit[y]" that "disadvantage[d] investors or otherwise unduly inhibit[ed] their ability to trade certain securities". Robinhood is and did.

I'd say you might be wrong on both counts: 1. preventing people from buying GME at, whatever, $300 might not have been disadvantaging them, and 2. it might not have been unduly inhibiting their ability to trade, but duly so.

You are so biased because you think GME is overvalued at $300.

Your bias even makes you defend Robinhood’s action to disable cash accounts buying certain stocks as DULY.

Wow

Re: Statement of SEC Regarding Recent Market Volatility

#467

Post by floor2 »

adriancr wrote: post #139

A few rants that i tried answering to someone before him removing post. Free speech is allowed. Prosecuting people for free speech is impossible. A bunch of imbeciles posting on forums is similar to a bunch of imbeciles on CNBC arguing that price is too high. A hedge fund with 12 billion dollars shorting 140% of a stock and then using media to drive price to 0 is illegal. Also more then idiotic since they caused the…

Essentially none of what is written in your "rants" is factually accurate, unless by calling it out you meant to make clear that these were emotional ramblings unrelated to reality.

Neutral analysts on CNBC providing commentary is pretty different than someone with a financial stake trying to pump up a stock they own to maximize their profit.

There is no evidence that any of the major funds involved in shorting have done anything illegal.

There's nothing illegal about a wash sale, wash sales are just a minor technicality around how cost basis is calculated for tax purposes.

People figured out they could exploit a fund that was overexposed in a trade and did so. We don't need all the conspiracies and class warfare. Greedy retail traders took some money from some greedy hedge funds, that's the whole story, it doesn't need to be more than that.

Re: Statement of SEC Regarding Recent Market Volatility

#468

Post by whimsicalism »

hogFeast wrote: post #186
numair wrote: post #107

Okay kids, story time. After the crash of 2008, I spent some time working with Dick Fuld. Yes, the former head of Lehman Brothers. Yes, the one people describe as “disgraced,” among other terms. Here’s the irony, though — Dick was one of the only people I encountered at that level of business/finance who wasn’t a scumbag. Unlike so many virtue-signaling Silicon Valley darlings, the guy behind the curtain was an honor…

Dick Fuld has said that several times publicly, there are interviews with the FCIC where he said that there was a conspiracy against LEH, and almost every part of the meetings at the NY Fed are public knowledge...you have no behind the scenes knowledge (you sound like every person: I met X who did Y terrible thing, he isn't actually a bad guy, I am going to ignore all the public information about X and prioritise my…

> I met X who did Y terrible thing, he isn't actually a bad guy, I am going to ignore all the public information about X and prioritise my super special "insider" knowledge

And it's such a trope. I swear, it feels like the quality of discussion on HN has gotten measurably more low-brow in the last few days.

Re: Statement of SEC Regarding Recent Market Volatility

#469

Post by hong_kong »

underseacables wrote: post #92

I can’t help but think about Bill Ackerman when I see stories about stock shorting and their dangers. Isn’t this exactly what Bill Ackerman did? He shorted Herbalife and then went on TV (there’s even a Netflix documentary) And he lost. How is that not market manipulation? What if Ackerman did not have a position in the company, would it not be market manipulation then? It seems like what Reddit did was stand on a soa…

https://chiron-risk.com/when-is-shareholder-activism-actuall...

Re: Statement of SEC Regarding Recent Market Volatility

#470

Post by DataWorker »

jancsika wrote: post #121

A Moment in the Life of an HN Genius: 1. Reads a technical document outside their domain. 2. Feels dumb because they don't have a grasp on any of the concepts. 3. Too busy to use the very internet which some of them probably helped build to magically render learning materials to the screen in front of them at zero marginal cost. 4. Sees the word "manipulation" 5. Substitutes the laymen's definition of "manipulation"…

When someone tells you not to believe what you read on the internet, on the internet.
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