It doesn’t appear that they did anything wrong but I haven’t been following it very closely. Might they get hit with frivolous lawsuits? Who knows, lots of ambulance chasers out there.
Otoh if they were to get nailed by the SEC, the civil lawsuits would pile up so fast heads would spin.
Billionaires had what they do to others happen to them. Billionaires think that the system is unfair because they shouldn’t be able to lose.
It goes something like this establishment wise, going ways back, certainly somewhere with advent of Mesopotamia’s Ziggurats.
its okay to steal poor people’s money, but you aren’t allowed to steal rich peoples money.
Kinda like robbing the bank and giving people their own money; not literally but kinda the same reasoning.
Exactly what would the hedge fund sue the reddit users for in civil court?
Getting outplayed?
Doing what they do themselves, but doing it better than them?
You can’t sue for fraud because you lost money in the stock market, even if you lost that money because you got punked by some guys on the internet who beat you at your own game.
Yeah they take a cut and the people who invest in their fund take all the risk. So reddit isn’t wiping out billionaires they’re wiping out regular people. Sure the managers can no longer skim the cream off the top of this fund but they’ll just start a new one while their previous investors are left holding the bag.
They intentionally drove the price up so that the funds had to put in their own money to cover their losses, or at least that’s how I understand it. While it may not be illegal they could probably find a sympathetic judge.
No, they won’t.
If the reddit guys get sued over this and lose, then you’ll see every hedge fund on wall street yanked into court, because they do THE EXACT SAME THING. Hedge funds cooperate to manipulate stock prices.
They did so with Gamestop. It wasn’t just one hedge fund that executed the massive short sale. It was Citron and Melvin, working together to try to crash the stock’s value and make money off the short.
You won’t see a single lawsuit over this, but you may see new SEC regulations to rein it in, because now the plebes are starting to use it to punk the hedge funds.
I’ll try to keep this as low-level as I possibly can…
Essentially a hedge-fund (an organization designed to invest people’s money) put a short on GME (Gamestop) for 138% of the companies total volume.
A short is effectively a “bet” that you borrow and sell shares NOW to then return that same share volume later.
Ie. You ask Billy for 10 pencils now, to give them to someone else for $25
This is a potential problem because shorts performed like this can put you into what is known as an “unlimited loss” situation.
Ie. The costs of a 10-pack of pencils rises up to $300 and Billy comes to you asking for those 10 pencils back; you now need to pony up or Billy is going to hurt you bad.
Well, Melvin Capital (the hedge fund) disclosed their short holdings publicly and the memelords over at /r/wallstreetbets figured out that Melvin Capital had a few million in Gamestop shorts.
Now, Reddit decided to just pump the Gamestop stock; as a result Melvin Capital will never have a successful short (unless they can somehow work some magic to get those on that have stock to sell).
Margin calls. Deadly when trading with borrowed money/securities and your position takes a hit.
I’m up $37,000 and wondering if we can really drive this to the moon. $1000 would be great, but discord kept screaming 5k 5k 5k!!1
I would love to join the millionaires club.
The shorter is getting short squeezed. It actually happens more often than people realize, but this case is unique because of the grassroots push for it.
Only problem is that stock has an intrinsic value; unless you think it’s going to rise to match the market value before it crashes, it doesn’t mean anything.
Sure, there will be a few who see some decent money from it, but most will be lucky to get their money back.
Dumb to short a game company during the pandemic anyway. Thats all people can do basically and tv.
Gamestop has been hurting for a while. COVID just made it a lot worse for them. They’re a retail chain.
The only way the rich stay ‘rich’ is by keeping the poor, poor.
For paper money to have any perceived value someone has to desperately want it. LOTS of someones.
It’s funny to see the “hate speech” cries now from Wall Street to try to damage control this
foh
Really drives home the point that the stock market as a whole is mostly nonsense and doesn’t actually indicate the health or value of a company. If anyone actually believes Gamestop is worth the value their stock is now selling at, I have some nice beach front property in Wyoming to sell you.
lol.
Im wishing we’d have sold the farm to buy Rhodium under $1000/oz when I bought it in 2015. Went up over $20,000 and the one buyer I deal with is begging for the stuff right now.
lol. The “grassroots” are providing the fig leaves for the really big hedge funds to hide behind while making massive profits off the squeeze.
When they decide the game of musical chairs is over, that turkey is going to fall off the waterfall so fast…