Meme Stocks AMC, GME Pop as the DOJ Investigates Short Sellers. What to Know.
Investors likely remember last year’s historic short squeeze. Companies like $AMC Entertainment(AMC.US$ and $GameStop(GME.US$ accelerated higher, driven by online investing communities like r/WallStreetBets. While retail investors gained from the pop in meme stocks, institutional investors lost billions of dollars. Now, the U.S. Department of Justice (DOJ) is investigating whether certain short sellers were using illegal tactics by sharing detrimental research reports ahead of time.
The DOJ announced that it has seized “hardware, trading records and private communications” in an attempt to investigate short sellers. In addition, regulators are also investigating whether short sellers engaged in spoofing and scalping. Spoofing involves placing a series of fake market orders in order to manipulate a stock price. The person engaging in spoofing has no intention of buying the actual stock. Scalping refers to when a short-seller liquidates their position without disclosing it.
Popular short seller Carson Block of Muddy Waters was served with a search warrant last October, according to people familiar with the situation. The FBI seized Block’s phone as part of the investigation. Furthermore, short seller Andrew Left of Citron Research had his computers seized by the FBI.
Left announced earlier this year that Citron Research would no longer publish short reports after 20 years. It’s certainly a possibility that the DOJ investigation swayed Left to make this decision. At the time of the announcement, Left was also facing blowback on social media for his position on GameStop.
AMC CEO Adam Aron seems to be supportive of this investigation, tweeting out: “Well, well, well, would you look at this,” with a link to a Wall Street Journal article concerning the investigation.
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Expendabiggles : Those were fomo, not short or gamma squeezes. Sorry. We were cut off before any such thing could happen. So they get to cheat, steal, commit market fraud, etc. And we are not even allowed to take advantage of their stupidity and greed (upon them) Legally under market rules because they control everything. If thats not a rigged system then there’s no such thing and there’s also no such thing as “laws” because bad guys are always allowed to win and get away. And if theres no laws, then what?? Pitch fork & torch time? SEC best fix this AND give everybody who did NOT break the law the winnings we earned from all this nonsense if they have any brains at all. A large fine that no trader will ever see a dime of aint gonna cut it this time. No no.
LalalanaRI : sit down and watch the play
LalalanaRI Expendabiggles: