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Thread: When will WallStreetBets end up getting people indicted or broke?

  1. #1

    Default When will WallStreetBets end up getting people indicted or broke?

    Steely irresponsibly posted this in the stock thread before I had time to post about it in the appropriate forum

    A reddit forum has led an online retail investor campaign to attack hedge funds by driving up the prices of highly shorted stocks, among them Gamestop. This is a little funny, but the leaders' political rants make me suspect there's also something genuinely dodgy going on, and I wouldn't be surprised if this operation somehow ends up with some of the people involved getting indicted, and others losing a lot of money—after we move from the pump phase to the dump phase.

    More info here:

    https://www.wsj.com/articles/how-gam...ed-11611743400

    https://www.wsj.com/articles/blackbe...op-11611681716
    “Humanity's greatest advances are not in its discoveries, but in how those discoveries are applied to reduce inequity.”
    — Bill Gates

  2. #2
    Quote Originally Posted by Aimless View Post
    also something genuinely dodgy going on
    It's called 'capitalism' look it up
    So may your dreams be monumental when your spirit guides the way
    Within in the flicker of a candle, I will heal your soul's decay
    We share a fate, trapped on a page, by the author of our world's demise

  3. #3
    Quote Originally Posted by Steely Glint View Post
    It's called 'capitalism' look it up
    I mean dodgy as in an illegal pump-and-dump scheme
    “Humanity's greatest advances are not in its discoveries, but in how those discoveries are applied to reduce inequity.”
    — Bill Gates

  4. #4
    Its not exactly low profile. The FTC probably already has an open investigation. I don't know if current regulations are equipped to deal with this scenario (they're hilariously bad at keeping up with technology and still don't have a good handle on this whole internet fad), but this is definitely an artificial bubble, and bubbles pop.

  5. #5
    Quote Originally Posted by Aimless View Post
    I mean dodgy as in an illegal pump-and-dump scheme
    Yeah, only Wall Street are allowed to do those.
    So may your dreams be monumental when your spirit guides the way
    Within in the flicker of a candle, I will heal your soul's decay
    We share a fate, trapped on a page, by the author of our world's demise

  6. #6
    When Congress finds out about this they're going to have the bi-partisan No, Not Like That Act written, voted on and out the door in 15 minutes flat.
    So may your dreams be monumental when your spirit guides the way
    Within in the flicker of a candle, I will heal your soul's decay
    We share a fate, trapped on a page, by the author of our world's demise

  7. #7
    Quote Originally Posted by Wraith View Post
    Its not exactly low profile. The FTC probably already has an open investigation. I don't know if current regulations are equipped to deal with this scenario (they're hilariously bad at keeping up with technology and still don't have a good handle on this whole internet fad), but this is definitely an artificial bubble, and bubbles pop.
    I was actually surprised that people exited their short positions given how awful the fundamentals are wrt the valuation. But then again I'm not willing to short other obviously overvalued stocks that are being pushed up by irrational exuberance/euphoria (see e.g. my Tesla remarks in the stock thread recently). It's too hard to know when irrational behavior will stop, especially when it's driven by a bunch of mom and pop investors.

    I'm surprised you haven't seen more people with long positions exit the market, though, clearly Gamestop isn't exactly a good asset and I doubt they'll get better money for the investment any time soon. I'm curious to see if there's data on long term holders of shares and if they're starting to abandon things... that could start to presage the end of the bubble.
    "When I meet God, I am going to ask him two questions: Why relativity? And why turbulence? I really believe he will have an answer for the first." - Werner Heisenberg (maybe)

  8. #8
    Quote Originally Posted by Steely Glint View Post
    Yeah, only Wall Street are allowed to do those.
    Pretty sure pump-and-dump schemes are illegal for Wall Street as well though. It's not the hedge funds I'm worried about—it's the suckers who'll be left with crappy equities after the leaders have taken their profits and bailed.
    “Humanity's greatest advances are not in its discoveries, but in how those discoveries are applied to reduce inequity.”
    — Bill Gates

  9. #9
    Yeah, but it's not illegal illegal.
    So may your dreams be monumental when your spirit guides the way
    Within in the flicker of a candle, I will heal your soul's decay
    We share a fate, trapped on a page, by the author of our world's demise

  10. #10
    So may your dreams be monumental when your spirit guides the way
    Within in the flicker of a candle, I will heal your soul's decay
    We share a fate, trapped on a page, by the author of our world's demise

  11. #11
    Quote Originally Posted by Steely Glint View Post
    Yeah, but it's not illegal illegal.
    I dunno I think at the higher end it's "you go to jail" illegal...
    “Humanity's greatest advances are not in its discoveries, but in how those discoveries are applied to reduce inequity.”
    — Bill Gates

  12. #12
    It is. But what Steely means, I believe, is that he thinks there isn't any difference between fraudulent pump-and-dump schemes and normal legal Wall Street practices.
    Last night as I lay in bed, looking up at the stars, I thought, “Where the hell is my ceiling?"

  13. #13
    He's wrong.
    Quote Originally Posted by Ominous Gamer View Post
    ℬeing upset is understandable, but be upset at yourself for poor planning, not at the world by acting like a spoiled bitch during an interview.

  14. #14
    Reddit Belters have attacked the Wall Street Inners
    “Humanity's greatest advances are not in its discoveries, but in how those discoveries are applied to reduce inequity.”
    — Bill Gates

  15. #15
    Just waiting to now see if the money printer will go brrrrr for a full meme trifecta. My prognosis is that the money printer will not go brrr at this time, as not even the dems are oblivious enough to bail out a hedge fund at during a pandemic while they're busy trying to stiff people over $2000 stimulus cheques and pushing the minimum wage hike to 2025, but I have to have hope.
    So may your dreams be monumental when your spirit guides the way
    Within in the flicker of a candle, I will heal your soul's decay
    We share a fate, trapped on a page, by the author of our world's demise

  16. #16
    I find the entire thing funny. And given that people's attentions are clearly stated "punish the evil hedge fund short sellers" I would find it very surprising if there was any sort of indictment. It is a perfectly legal and valid to try to squeeze short sellers and then exit your position after you've accomplished your goal.

  17. #17
    When gamestop hit $50 I thought I had missed the boat so I took a shot on some of the other retro stocks reddit seemed to favor (that were shorted the most). I picked one of the weaker ones, blackberry, but I still doubled my money today.
    "In a field where an overlooked bug could cost millions, you want people who will speak their minds, even if they’re sometimes obnoxious about it."

  18. #18
    “Humanity's greatest advances are not in its discoveries, but in how those discoveries are applied to reduce inequity.”
    — Bill Gates

  19. #19
    Yeah, this morning has been crazy. BB dropped by half when robinhood restricted buying options. If I'm putting the pieces together correctly, Citadel is behind the hedgefund bailout, and robinhood runs through citadel, and citadel is having none of this "democratic" nonsense mess with its bottomline.
    "In a field where an overlooked bug could cost millions, you want people who will speak their minds, even if they’re sometimes obnoxious about it."

  20. #20
    Senior Member Flixy's Avatar
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    Blocking people buying but not selling something you have a big stake in yourself sounds questionable.
    Keep on keepin' the beat alive!

  21. #21
    Sounds like market manipulation to me.
    So may your dreams be monumental when your spirit guides the way
    Within in the flicker of a candle, I will heal your soul's decay
    We share a fate, trapped on a page, by the author of our world's demise

  22. #22
    I expect most major brokers etc have done something similar, but the relationships between RH, Citadel and Melvin certainly make this an even more difficult situation for everyone involved. They were hoping to get away with just a class action lawsuit, then there was talk of congressional hearings, and now the risk of more severe penalties... from bad to worse.
    “Humanity's greatest advances are not in its discoveries, but in how those discoveries are applied to reduce inequity.”
    — Bill Gates

  23. #23
    Reddit found an infinite money glitch in the stock market and then Wall Street rage quit, is demanding the fed nerf.
    So may your dreams be monumental when your spirit guides the way
    Within in the flicker of a candle, I will heal your soul's decay
    We share a fate, trapped on a page, by the author of our world's demise

  24. #24
    Quote Originally Posted by Steely Glint View Post
    Reddit found an infinite money glitch in the stock market and then Wall Street rage quit, is demanding the fed nerf.
    I think there's a reasonable argument to be made that investors who are not 'sophisticated' (which, believe it or not, is a legal term in the US) are taking extremely large risks and, in fact, are likely to lose much if not all of their money given that the market price of these equities in unmoored from reality right now. So suggesting that use of certain derivatives that dramatically amplify risk should be restricted to sophisticated investors is not in fact unreasonable.

    Which isn't to say that the shorting folks aren't being a bit whiny about it.
    "When I meet God, I am going to ask him two questions: Why relativity? And why turbulence? I really believe he will have an answer for the first." - Werner Heisenberg (maybe)

  25. #25
    Hahaha this season really has hit the groin running:

    “Humanity's greatest advances are not in its discoveries, but in how those discoveries are applied to reduce inequity.”
    — Bill Gates

  26. #26
    BB has clawed back about half of the value it has lost since robinhood freaked out. Wonder how long they will try to hide the ball before they list it again, I don't see an out for them that doesn't cause serious market volatility.
    "In a field where an overlooked bug could cost millions, you want people who will speak their minds, even if they’re sometimes obnoxious about it."

  27. #27
    Quote Originally Posted by wiggin View Post
    I think there's a reasonable argument to be made that investors who are not 'sophisticated' (which, believe it or not, is a legal term in the US) are taking extremely large risks and, in fact, are likely to lose much if not all of their money given that the market price of these equities in unmoored from reality right now. So suggesting that use of certain derivatives that dramatically amplify risk should be restricted to sophisticated investors is not in fact unreasonable.
    There's also a reasonable argument for preventing 'sophisticated' traders from doing that because when they fuck it up in a greed and cocaine fueled haze they crash the economy, trigger a global recession and have to be bailed out by the governments to the tune of trillions of dollars.
    So may your dreams be monumental when your spirit guides the way
    Within in the flicker of a candle, I will heal your soul's decay
    We share a fate, trapped on a page, by the author of our world's demise

  28. #28


    Wall Street is now posting angry threads on the official Stock Market forum about filthy casuals ruining their immersion
    So may your dreams be monumental when your spirit guides the way
    Within in the flicker of a candle, I will heal your soul's decay
    We share a fate, trapped on a page, by the author of our world's demise

  29. #29
    Generally when 'sophisticated' trading companies go bust, they go bust, they don't get bailed out by governments.
    Quote Originally Posted by Ominous Gamer View Post
    ℬeing upset is understandable, but be upset at yourself for poor planning, not at the world by acting like a spoiled bitch during an interview.

  30. #30
    Quote Originally Posted by Steely Glint View Post
    There's also a reasonable argument for preventing 'sophisticated' traders from doing that because when they fuck it up in a greed and cocaine fueled haze they crash the economy, trigger a global recession and have to be bailed out by the governments to the tune of trillions of dollars.
    There's actually a distinction. Generally the title of a sophisticated investor applies to an individual investing their own money. The issues you rightly raise about some financial companies are generally tied to moral hazard issues which arise from handling other people's money.

    I'm not suggesting we shouldn't have regulatory limits to manage the risk of moral hazard; rather, I'm suggesting that if individuals are going to purchase relatively complex and highly risky derivatives, we have a vested interest as a society in limiting the downside for those who are most vulnerable to making uninformed investing decisions.

    There's a super weird lawyer thing that happens when big investors get involved in complex derivatives, securities, or debt deals called a 'big boy letter'. Essentially it says that both parties to a transaction know it's crazy risky and that there are all sorts of undisclosed information that the buyers might not have. I don't think that we should assume that your mom and pop retail investor getting stock tips from reddit should be expected to have that same level of understanding about the risk they are taking on when funding a short squeeze, likely to their own detriment.
    "When I meet God, I am going to ask him two questions: Why relativity? And why turbulence? I really believe he will have an answer for the first." - Werner Heisenberg (maybe)

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