GameStop, an American chain of brick-and-mortar video game stores, had struggled in recent years due to competition from digital distribution services, as well as the economic effects of the COVID-19 pandemic, which reduced the number of people who shopped in-person.As a result, GameStop's stock price declined, leading many institutional investors to short sell the stock. “I can see by your scars that you took a bailout from Ken Griffin,” one of them will say, lighting a cigarette with a faraway look in his eye. But your best argument is: Look, we put out a bearish report, sure, and one could say it was dishonest, sure, but the stock ripped up, so no one can say that our bearish report deceived anyone. Get your head start with a free trial today. He started buying GameStop in 2019, took a victory lap on Friday with chicken tenders and champagne, and as of yesterday he seems to have turned a $53,566.04 investment into $13.9 million. Why sell a video game without testing it? “This stock is trading at $90, that’s a steal,” people will think, if they have five minutes to think about it, and they’ll put in buy orders and push the stock back to its natural price when it reopens. “I took a bailout once. Melvin founder Gabe Plotkin was a top portfolio manager at Point72’s predecessor firm, SAC Capital Management, before he left to start Melvin. Of course the chart of GameStop Corp.’s stock price from yesterday is nuts. You might enjoy it. I’m not even convinced it’s that though. GameStop (EB Games, anciennement Babbage's) est une entreprise spécialisée dans la distribution de jeux vidéo et de matériel électronique. It looks like the email address you entered is not valid. If you halt GameStop for going up too much, people are just going to hang out on Reddit talking it up more until it reopens. They might be wrong or exaggerated or misstated, but it’s not, like, core fraud. View daily, weekly or monthly format back to when GameStop Corporation stock was issued. People are (still) worried about financial models. Why was Epstein, who was not a lawyer or an accountant or a college graduate for that matter, so good at tax? When hundreds of companies report this week, clients will have updated models within hours of the press release. “In short, there is no question that Epstein performed substantive work for Black and that Black genuinely believed that Epstein was extremely smart, capable, and saved him substantial amounts of money,” the report says. When hundreds of companies report this week, Canalyst clients will have updated models within hours of the press release. Or is a short squeeze illegal? [4] Here’s Citron’s actual boilerplate: “As of the publication date of a Citron report, Citron Related Persons (possibly along with or through its members, partners, affiliates, employees, and/or consultants), Citron Related Persons clients and/or investors and/or their clients and/or investors have a position (long or short) in one or more of the securities of a Covered Issuer (and/or options, swaps, and other derivatives related to one or more of these securities), and therefore may realize significant gains in the event that the prices of a Covered Issuer’s securities decline or appreciate. Then he bought more: Short sellers would borrow MAAX bonds (presumably from him), and then sell them to him, so that he ended up with “22 million more bonds than MAAX had ever issued.” Then he stopped lending them out, forcing the short sellers to buy bonds to cover their shorts. My model here—and I should emphasize this is purely a guess—is that the people most identified with the GameStop trade on Reddit, at this point, are much more interested in securing their legendary status on Reddit than they are in taking profits at the expense of whoever came in later. Typically, after the promoters profit from their sales, the stock price drops and the remaining investors lose money. But share price surges such as the 700 per cent year-to-date jump in US video game retailer GameStop could potentially wipe out billions of dollars of those short bets. Enraged redditors band together to drive the price of the stock up, to spite you, like they did with GameStop. Is it manipulation? Bets against GameStop alone amounted to more than US$2.2 billion as of Monday, FIS' Analytics data showed, equivalent to more than a fifth of the company's market value. The current scrum over Gamestop — in which retail traders have gone head-to-head with short-selling firm Citron — suggests that might become a thing of the past. You buy a bunch of some smallish-cap stock. One popular topic on WallStreetBets is recalling stock borrow. “When stock prices get too high, sensible value motives will take over”: Nope. Where were we? A popular conclusion from the GameStop story is “well I guess the stock market is nonsense now,” and I’m not sure that conclusion is wrong. “Mr. You have disclosed that you could be long or short the stock. You will not be notified about this happening. Is it illegal to make borrow impossible with the goal of messing with short sellers? Seems like the sort of thing the SEC wouldn’t like. But if Reddit has as much magic power as it seems to after GameStop then, sure, it might work. The losses stem from Melvin’s array of short bets against companies and have stunned clients and other traders. Google halts Play Store 'review bombing' by GameStop traders. You are, say, Andrew Left of Citron Research, or Gabriel Plotkin of Melvin Capital Management—some hedge fund manager who has attracted the ire of the WallStreetBets subreddit for shorting GameStop. I sell the stock to them at the higher prices. Well, a while back there were reports that the SEC was looking into hedge fund “idea dinners,” where hedge funds get together to pitch each other on their third-best ideas. meREWARDS lets you get coupon deals, and earn cashback when you complete surveys, dine, travel and shop with our partners. When the senior officer asked how he could possibly know this, Falcone stated that he was working the position himself and that he (i.e., Harbinger) had acquired approximately 190 million bonds. Did everyone spontaneously applaud Amanda Palmer in a Havelock North cafe? In a world where stocks are tokens for fun YOLO trading, doesn’t it just feel quaint, that Fink and BlackRock Inc. buy all the stocks, hold them forever, and tell companies what to do? Other people, innocents and high-frequency trading algorithms, see it go up on heavy volume and think “hey this is a good stock, we should buy it.” They buy it, pushing the price up. Or the other way: Between 10:45 and 11:15 yesterday, GameStop fell from $159.18 to $88.09, with four trading halts along the way. Falcone stated that the Wall Street firm should just keep bidding for the bonds. I don’t know, it’s just a weird niche. On the one hand, I do not see a whole lot of deception in this GameStop situation. Surely the price did not reflect expectations about future cash flows, but just as surely the price reflected supply and demand: We all wanted to own it because we were having fun, so the price went up. Those things are not so different. Google has removed a wave of negative reviews of popular stock-market trading apps targeted by furious investors. There is some incentive to pitch good ideas, because it can be helpful to you if your friends all pile into your trade, pushing up the price. Almost 178 million shares traded, worth almost $17 billion. Black would go his lawyers and say “hey my guy found this way to save a billion dollars in taxes, is it legal,” and the fancy lawyers in the Paul Weiss tax department would say “wow, sure is, this is amazing, why didn’t we think of this, this guy is a Michelangelo of tax minimization”? I actually don’t have too much trouble believing this—in my experience, some people are just born with a natural gift for tax structuring, and need surprisingly little formal training to achieve their potential—but it is fascinating. Mr. Black also asked employees of his family office; attorneys at law firm Paul, Weiss, Rifkind, Wharton & Garrison LLP; and other outside accountants, lawyers and tax professionals to vet and challenge Epstein’s advice when it was given, the report states. At the same time … what? For instance, if you are a widely followed stock promoter with a subscription tip newsletter, and you email tips to your subscribers and then sell your stock to them while saying that you’re buying, that seems dishonest, and the SEC will go after you. GameStop is not the only short bet that has turned sour. I mean, boy is this neither legal or investing advice, but it is funny. The investments are in Melvin’s fund and include non-controlling revenue shares in the firm. I like it! If a lot of people on Reddit band together to drive the price of a stock higher, is that illegal? If everyone bands together to recall stock borrow, there will be fewer shares available for short sellers, and the short sellers will be forced to cover their bets by buying stock, pushing the price up more. He still has a short bet although he has covered the majority of the position at a 100 per cent loss. It closed on Friday at $65.01, opened yesterday at $96.73, got as high as $159.18 and as low as $61.13, and closed at $76.79. I am not going to say it is irrational; people have spent their money on worse things. We sell the stock to them at the higher prices. The senior officer and the other the Wall Street firm personnel were stunned. It describes the two men’s relationship deteriorating beginning in 2016 after a fee dispute. LONDON: Global bets worth billions of dollars could be at risk as amateur share traders challenge the bearish positions of influential funds, inflating stock valuations and leaving the professionals looking at potentially hefty losses. Gone are the days when bruised retail investors fled after prominent hedge funds bet against a stock - the GameStop effect is rippling across US markets and spreading to Europe. I suppose we did our trading “for the purpose of inducing the purchase or sale of such security by others,” but not by deceiving them about what’s going on. Did we try “to create or effect a price or price trend that does not reflect legitimate forces of supply and demand”? I have been asked that question a lot recently, and I want to be clear that: That said I suppose we should talk about the question in general and extremely not-legal-advice terms. The other is “market manipulation.” Nobody knows what this means. Rated 1 out of 5 by dankogram from Gamestop sells broken gamecube games 5/6 Discs I bought from this website came to my house BROKEN. However, the company's share price has quadrupled since the end of last week, reaching as much as US$340 in US pre-market trading on Wednesday. Le siège de la société est situé à Grapevine, au Texas.En 2016, la société comptait 7 117 points de vente répartis dans le monde entier [2 The SEC has gone after forms of dishonesty that aren’t quite lying about the stock. Gamestop logo and one star review set over a share price ticker. So the exchange halts trading for five or ten minutes, so that everyone who wants to buy or sell has time to get back to their desks and put in orders. One is “securities fraud.” This basically means lying about a stock. But it is not the sort of rationality that the stock market is set up for. I bought a Division 2 game and GameStop was giving ten dollars cash which goes onto the account (for buying the game); this too disappeared. Maybe the craziest thing in the chart is not the wild spikes up and down, but the flat lulls when no one was trading because the stock exchange wouldn’t let them. They'll spend more time on analysis, and less on data entry, thanks to, exceptional accuracy and coverage. “If institutional investors had an internet site or chat where they arguably cajoled each other or coordinated to buy stock to move the price higher,” one reader asked me by email, “wouldn’t that be stock manipulation and wouldn’t the SEC get involved?”. Who’s to say what’s “legitimate”? But there were no bonds to be bought, since he owned them all (and more). "Most of the short positions are funded on margins. Morgan Stanley, Goldman Lead Bonus Bounces for Bankers in Asia. There are variations. I do not think this theory really applies to GameStop. There is some incentive *not* to pitch your best ideas, because you might want the best trades all for yourself. There are two main things that are illegal. For instance: In this version, I have not lied about a stock. Telling your friends that you like a stock and they should buy it is, more or less, fine. While the law firm, Dechert, found no evidence that Black was involved in any way with Epstein’s criminal activities, its report revealed that the CEO had paid $158 million to the disgraced financier from 2012 to 2017, a sum much greater than previously known. Here is one of them: The shorts have become the target. On the other hand it is all pretty dumb? The securities company also paid a "speaking fee" to Biden’s Treasury Secretary Janet Yellen, $710,000 dollars in 2019 and $760,000 dollars in … I want to read Roaring Kitty’s letter to CEOs. After Epstein was arrested on sex-trafficking charges and died in jail, there was quite a bit of wild speculation about where his money came from, and specifically about why billionaires were so willing to pay him so much money for somewhat vague services. From now on that will just be the signal to start a massive short squeeze." [1] I kid. They pitch ideas that they think are good and will appeal to their friends. Apollo said an outside law firm hired to conduct the review found that the asset manager never retained Epstein for any services and that he never invested in any Apollo-managed funds. Or if you are a promoter or research firm and you put out positive research about a company, but you don’t disclose that the company paid you to put out the research, that is also bad. “This is the way,” a chorus of redditors replied. But what can they do about it? GameStop first came to WallStreetBets’ attention in March 2019, when it was trading around $10, and a user made a deep-value case that was “not contingent on a turnaround or business expansion.” Stuff soon got weird though, with another poster proposing a WallStreetBets takeover of GameStop. No one says “huh this stock is up on a lot of good buying pressure, I should buy some”; everyone who buys says “hey this stock is up because it’s being pumped, and if I get in now I might still get out before it collapses, and that’ll be fun.” It is “respect the pump” as a quasi-mystical mantra. “Despite a punishing two weeks and relentless chat-room taunting, GameStop Corp. haters are showing no signs of surrender,” Bloomberg reported yesterday; short interest has barely budged, and there are still shares available to borrow. Roaring Kitty was up $11 million. It is sort of a perverse badge of honor on Wall Street to get absolutely killed on a huge trade. (Try, in the body of the report, to say things like “this stock is bad,” not “we are short this stock.”) You have made a bearish case that perhaps you do not believe, though it is hard to prove your beliefs. Legally, it means something like: To effect, alone or with 1 or more other persons, a series of transactions in any security … creating actual or apparent active trading in such security, or raising or depressing the price of such security, for the purpose of inducing the purchase or sale of such security by others. Find current gen and next-gen consoles, games and accessories for PlayStation, Xbox and Nintendo, along with a wide selection of gamer-centric apparel, collectibles & more. Short sellers typically borrow stocks to sell with a view to buying them back later when the price falls. It is a way! I show up on Reddit and say “hey let’s pump GameStop.”. I mean, or maybe it did, but in a weird and reflexive way. The senior officer asked Falcone how the Wall Street firm might satisfy its obligation to Harbinger. In related news, venture capitalist Josh Wolfe suggested a funny trade to me. Get your head start with a, Investor Alert: Social Media and Investing -- Stock Rumors. The bad news, for Leon Black, is that he has to step down from running Apollo Global Management for paying too much money to Jeffrey Epstein: Just months after Apollo announced an internal investigation into Black’s long association with the late financier, the investment firm said in a statement Monday that he would retire as CEO no later than July 31, while remaining chairman. You have made a bearish case and some bullish trades, sure, but you might reasonably argue “we are bearish in the long term, but we are just making a tactical trade based on market dynamics, what’s wrong with that.” That’s not a great argument. GameStop’s 10-day realized volatility is 308%. Taking a step back: Should the SEC care about all of this? Here is the SEC’s “Investor Alert: Social Media and Investing -- Stock Rumors,” which pretty much defines a pump-and-dump this way: For example, in a “pump-and-dump” scheme, promoters “pump” up the stock price by spreading positive rumors that incite a buying frenzy and they quickly “dump” their own shares before the hype ends. Copyright© Mediacorp 2021. “Just keep bidding for the bonds,” “sometimes you are just on the wrong side of a trade,” I love it so much. Fink is now calling on all companies ‘to disclose a plan for how their business model will be compatible with a net-zero economy,’ which he defines as limiting global warming to no more than 2 degrees Celsius above preindustrial averages and eliminating net greenhouse gas emissions by 2050.” Companies, what are companies, we trade stocks here. When the stock plummeted from $159.18 to $132.32, and then was halted for five minutes, nobody said “oh wow this $159 stock is trading at $132, what a bargain, I’d better jump in.” Those concepts mean nothing now. Yesterday Bloomberg’s Tracy Alloway wrote about five lessons from the GameStop/WallStreetBets situation. Short-seller Andrew Left, who runs Citron Research and is one of the big names behind the bets against GameStop, shorted the stock when it traded around US$40, expecting it to halve in value. Oh, right, GameStop. And, you know, this is the opposite of that. Neither Citron Research nor Citron Capital will update any report or information to reflect changes in positions that may be held by a Citron Related Person.”. Robinhood Traders Face the Taxman After Falling In Love With Stocks. Gleefully getting top-ticked on a stock—buying it at its highest price ever and then bragging about it as the price collapses—in order to earn the strange respect of your friends on Reddit: That is a thing you can do. Seems like market manipulation, “painting the tape” or something. The posts I’ve seen about GameStop have been either (1) substance-free “GME to $1,000” stuff or (2) arguments based on publicly available information plus personal opinion and guesses about the future. I suppose a really coordinated successful effort to squeeze borrow might count as market manipulation, at least in the SEC’s view, but I’m not sure how serious this effort was. But the SEC wasn’t concerned about market manipulation. In Europe, Evotec, Nokia and Varta have outperformed the wider market 2021. The predators have turned prey. The stock closed Friday at its all-time high. I guess my answer would be that it might be illegal in all sorts of ways, but it is not obviously illegal, and if the U.S. Securities and Exchange Commission were to go after WallStreetBets for this stuff they will be breaking new ground and going beyond their previous cases. Shop at GameStop online at GameStop.com, via the GameStop app or in stores. Well, there is not a lot of deception here. GameStop is listed on the NYSE and employs 14,000 staff. I don’t know. At some point an executive from the “Wall Street firm” called up Falcone to talk about the situation, and even in the SEC’s dry language you can tell that it was one of the greatest conversations in all of Wall Street history: At some point, the conversation turned to the trading in the MAAX bonds. We talked a lot about GameStop yesterday, but I missed this terrific article by Bloomberg’s Brandon Kochkodin taking the long view of Reddit’s infatuation with the stock. (Or up to $110.) “Join us in a fun game of chicken,” was our basic message here. If you'd like to get Money Stuff in handy email form, right in your inbox, please subscribe at this link. If I did know, I wouldn’t tell you, because I do not give legal advice in this newsletter, and I particularly do not give legal advice that people on Reddit might read while pumping up stocks. This was at a time when GameStop had … The most classic pump-and-dump goes like this: This is very straightforwardly illegal and the SEC goes after this stuff all the time, alleging securities fraud. Melvin Capital Management also closed out a short position against GameStop at a 100 per cent loss. We talk about these every year, and perhaps we’ll talk about this one tomorrow, but today I don’t feel like it. They'll spend more time on analysis, and less on data entry, thanks to exceptional accuracy and coverage. The hedge funds shorting this like Melvin entered into a very crowded trade where the risk / reward towards the end, when GameStop was trading in the $3-$4 was very questionable. “The stock surged as much as 145% to $159.18 on Monday,” reports Bloomberg News, “triggering at least nine trading halts.” The theory behind a trading halt is basically that the stock has moved around too much, too quickly, for people to really mean it. It opened the day at USD$44.7 after a previous close of USD$44.97. New Larry Fink letter dropped. I put out rumors—in my subscription newsletter, on Reddit, in. Perhaps market psychology, in 2021, is sometimes reverse psychology. The SEC might think so, actually. The SEC was concerned that the hedge funds might be a “group” under the securities laws, if they teamed up to own more than 5% of the stock, and that they hadn’t made the necessary group disclosures. The influx of cash is expected to help stabilize Melvin, which in 2021 has lost 30% through Friday, said people familiar with the firm. I dunno. Thanks! It might not work, of course; people might read your report and be like “oh yeah this company is bad” and sell the stock, and then you’d lose money. Ideally it would be one that has gotten some bullish attention on WallStreetBets, but not too much. What got you?” And Plotkin will have to say “well see there’s this subreddit.”. Like if you are a securities regulator, you can think of your job narrowly as preventing people from lying about stocks, or more broadly as encouraging capital formation and fostering confidence in markets and moving markets toward efficiency and perfection. Here (via Robin Wigglesworth) is a post on Reddit’s r/wallstreetbets forum asking “Can I get a flair for buying GME at the literal top ($155.29)?” (It was not the literal top, but close.) So if you buy stock with the purpose of pushing the price up so that other people will buy it, that’s market manipulation. Spreads also shot up from around 2 basis points to 15 basis points. Marc Rowan, one of Black’s top lieutenants, will succeed him as CEO as part of a governance overhaul that will also eliminate weighted voting rights. The SEC goes after stuff like this occasionally. You could have other miscellaneous theories about words like “collusion” and “short squeezes.” Is it illegal for people to band together to all buy stock at the same time? It has all the prices at once. Mr. Black’s last payment to Epstein was made in April 2017.
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