Article: Russian central bank to expand market manipulation criteria

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Russian central bank to expand market manipulation criteria

Elena Fabrichnaya, 13 May 2021

MOSCOW, May 13 (Reuters) – Russia’s central bank said on Thursday it plans to expand a list of actions deemed to be market manipulation, facing a need to protect growing numbers of retail investors after a series of cases involving what it called malicious transactions.

Retail investors flooded to the market in 2020 as central bank rate cuts reduced the appeal of bank deposits and the COVID-19 pandemic left people working from home and with time to spare. Continue reading “Article: Russian central bank to expand market manipulation criteria”

Article: Robinhood’s Big Gamble

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Robinhood’s Big Gamble

Sheelah Kolhatkar, 10 May 2021

Early on the morning of January 19th, Cody Herdman woke to the vibration of his smartphone alarm under his pillow. He immediately checked the finance app Robinhood for the trading price of a company called GameStop. Herdman, who is nineteen, is a freshman computer-science major at Dakota State University, where until recently he played center for the Dakota State Trojans football team, and he had been investing in the stock market for a month.

Robinhood, which offers zero-commission trading in stocks and cryptocurrencies, pitches itself as an enlightened version of Wall Street; its stated mission is to “democratize finance for all.” Herdman’s friend Chase Bradshaw had introduced him to trading on the app, which now consumed much of the time that he used to spend playing video games. Continue reading “Article: Robinhood’s Big Gamble”

Article: Dummy WallStreetBets Crypto Pumps Telegram Group Dupe Investors In $2 Million Scam

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Dummy WallStreetBets Crypto Pumps Telegram Group Dupe Investors In $2 Million Scam

Bhushan Akolkar, 05 May 2021

The altcoins market is bustling with new all-time highs and crypto scammers are once again round the corner. Members of the popular WallStreetBets Reddit forum were recently targeted by a spammy and dummy Telegram group duping investors of $2 million in losses.

In the latest crypto scam, a dummy Telegram account dubbed ‘WallStreetBets Crypto Pumps’ swayed investors on buying the new token called WSB Finance even before its listing on the exchange. This Telegram account is in no way linked to the infamous Reddit stock board WallStreetBets responsible for the GameStop (NYSE: GME) earlier this year on Wall Street. Continue reading “Article: Dummy WallStreetBets Crypto Pumps Telegram Group Dupe Investors In $2 Million Scam”

Article: After WallStreetBets, Australia’s securities regulator warns share trading forums

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After WallStreetBets, Australia’s securities regulator warns share trading forums

Byron Kaye, 27 April 2021

SYDNEY (Reuters) – Australia’s securities regulator has contacted internet share trading forums to question them about policing of “pump and dump” scams on their platforms, a sign of growing scrutiny of an investment subculture that soared during pandemic lockdowns.

The Australian Securities and Investments Commission (ASIC) told Reuters it has boosted surveillance of local retail trading internet chatrooms that have sprung up since the “WallStreetBets” Reddit chatroom was linked to wild U.S. stock fluctuations this year.

That has led to discussions between the regulator several operators of the profanity, irony and meme-laden chat forums – who often operate anonymously – about their liability if they allow share inflation schemes to flourish. Continue reading “Article: After WallStreetBets, Australia’s securities regulator warns share trading forums”

Article: South Korea’s retail investor army declares war on short-sellers

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South Korea’s retail investor army declares war on short-sellers

Song Jung-a, 25 April 2021

Jung Eui-Jung, a former South Korean bank employee, recalls his bitter experience as a novice stock trader more than a decade ago, when he lost Won25m ($22,000) after the small metal group he invested in was delisted.

“It is the past that I want to forget. Back then, I didn’t have much access to information. I was bound to lose in an environment tilted against amateur traders,” said the 62-year-old head of the Korean Stockholders’ Alliance, an advocacy group that represents about 44,000 retail investors.

But the tables have turned over the past year as retail investors have emerged as the dominant force in South Korea’s $2tn stock market, accounting for almost 60 per cent of daily turnover. With that heft, amateur traders have become a political force, seeking to even the odds against professional investors.

Mom-and-pop investors bought a net Won63.9tn of Korean shares last year, compared with a net sale of Won5.5tn in 2019. That helped propel the benchmark Kospi index up 118 per cent following a coronavirus-driven sell-off last March, making it one of the best-performing markets globally.

Almost one-fifth of Korea’s population of 52m dabbles in stocks, and data showed local brokerages have amassed Won76tn in cash deposits.

“The market dynamic is changing fast with individual investors becoming a powerful force that even hedge funds should be afraid of,” said Albert Yong, managing director at Petra Capital Management, a Seoul-based investment firm.

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Article: Hedge funds rethink after GameStop pain

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Hedge funds rethink after GameStop pain

Laurence Fletcher, 15 April 2021

Hedge funds are to revise the way they monitor risk after retail investors sent the price of stocks such as GameStop soaring — triggering big losses for the fund managers that bet against them. Investors co-ordinating their purchases on Reddit’s WallStreetBets message board were able to drive up the share price of Gamestop, the US video game retailer, from less than $20 at the start of the year to more than $480 by late January, while the prices of some other beaten-down stocks also soared. For some hedge funds, that proved painful.

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Article: Robinhood Says 9.5 Million People Traded Crypto on Its App in Q1

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Robinhood Says 9.5 Million People Traded Crypto on Its App in Q1

Will Gottsegen, 09 April 2021

The online brokerage service Robinhood said on Thursday that 9.5 million of its customers traded cryptocurrency on its platform in Q1 of 2021.

That’s up from just 1.7 million in Q4 of last year, a 458% spike.

In a blog post, the company chalked up the numbers to crypto’s growing “popularity”: the global market cap of all cryptocurrencies has doubled in the past three months to over $2 trillion. Continue reading “Article: Robinhood Says 9.5 Million People Traded Crypto on Its App in Q1”

Article: GameStop shares fall as company looks to cash in on Reddit surge

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GameStop shares fall as company looks to cash in on Reddit surge

Staff and agency, 05 April 2021

Shares in GameStop fell on Monday after the video-game retailer said it may sell up to $1bn (£720m) worth of stock as it tries to make the best of the 900% surge in its shares from a Reddit-driven rally this year.

The company said it would sell up to 3.5m shares and use the proceeds to speed up its shift to e-commerce in an overhaul being led by the billionaire Ryan Cohen, its biggest shareholder and a board member of GameStop. Shares in the company fell sharply in pre-market trading in New York but had recovered by the close to $186.95, a fall of 1.9%. Continue reading “Article: GameStop shares fall as company looks to cash in on Reddit surge”

Article: How Goldman And Other Wall Street Giants Loaned Billions To Someone Who Traded Like A Meme Stock Gambler

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How Goldman And Other Wall Street Giants Loaned Billions To Someone Who Traded Like A Meme Stock Gambler

Kevin Dowd,  29 March 2021

Imagine if Goldman Sachs GS -0.5% lent a billion dollars to RoaringKitty.

News about margin calls is once again roiling markets. Except this time, instead of industry outsiders like Robinhood and RoaringKitty, a leading GameStop bull on WallStreetBets subreddit, the drama centers on traditional giants of the financial establishment. Continue reading “Article: How Goldman And Other Wall Street Giants Loaned Billions To Someone Who Traded Like A Meme Stock Gambler”

Article: Report: Robinhood Is Building A Platform To Democratize IPOs

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Report: Robinhood Is Building A Platform To Democratize IPOs

Sarah Hansen, 25 March 2021

Robinhood is working on a platform that will allow its users to buy into initial public offerings, Reuters exclusively reported Thursday, citing people familiar with the process, marking another push by the popular investment app to democratize investment opportunities that are traditionally only available to big banks and Wall Street firms.

The allocation of IPO shares is a complex process—it doesn’t happen the same way for every listing and can depend on the type of industry and market conditions at the time. In general, the majority of available shares go to institutional investors. Some shares can also be reserved for retail investors, who are then able to buy them through their brokerage firms. More established and wealthier retail investors often have a better chance of receiving IPO shares than lay people, especially in popular listings. Continue reading “Article: Report: Robinhood Is Building A Platform To Democratize IPOs”

Article: FD Funds Management Backed by Fidelity Files for Bitcoin ETF with SEC

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FD Funds Management Backed by Fidelity Files for Bitcoin ETF with SEC

Steve Muchoki,  25 March 2021

Fidelity Investments, an American multinational financial services corporation based in Boston, Massachusetts, through its subsidiary FD Funds Management has filed for a Bitcoin ETF with the United States Securities and Exchange Commission. According to Form S-1 filed by Fidelity Investments, the ETF will be called Wise Origin Bitcoin Trust, if the SEC approves it.

Notably, the United States Securities and Exchange Commission has rejected two other applications for a Bitcoin ETF. According to the commission, Bitcoin is a very volatile asset that may put investors’ capital at risk.

However, with already two Bitcoin ETFs approved in the Canadian market, there are high chances the United States will move towards considering a similar move. Furthermore, more institutional investors are showing the will to hold digital assets as a hedge against the deflationary fiat currencies. Continue reading “Article: FD Funds Management Backed by Fidelity Files for Bitcoin ETF with SEC”

Article: Melvin Capital Is Facing Nine Lawsuits Related to the GameStop Frenzy

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Melvin Capital Is Facing Nine Lawsuits Related to the GameStop Frenzy

Michelle Celarier, Institutional Investor, 22 March 2021

Gabriel Plotkin’s Melvin Capital, the hedge fund at the center of the GameStop trading frenzy in January, is a defendant in nine lawsuits by retail investors alleging a conspiracy to limit trading that caused them to lose money.

The hedge fund revealed the existence of the lawsuits in its annual ADV filing with the Securities and Exchange Commission.

Melvin was famously short GameStop and lost more than 50 percent during January following a short squeeze orchestrated by a Reddit forum called WallStreetBets, whose members included retail investors in GameStop. As the stock soared, various online brokerages catering to those investors, including Robinhood, restricted buying shares of GameStop, among other stocks heavily shorted by Melvin.

Article: Why Is Everyone (Still) Talking About GameStop Stock?

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Why Is Everyone (Still) Talking About GameStop Stock?

Keith Noonan, 19 March 2021

GameStop (NYSE:GME) has to be 2021’s most interesting stock. The video game retailer started to pick up momentum ahead of the launch of new game consoles from Sony and Microsoft last year, and over the past two months, short-squeeze mania and other big developments have led to incredible swings for the the company’s share price.

GameStop’s stock climbed as high as $483 per share during the height of short-squeeze mania. While the stock briefly returned to trading in the range of $50 per share, it’s bounced back once again and traded at $201.75 at Thursday’s close. That price represents a 971% increase year to date and a 4,715% increase from the $4.19 share price the stock had one year ago.

Why is GameStop surging, and what comes next?

How did we get here?
The start of GameStop’s improbable, supercharged rally can be traced back to the introduction of Sony’s PlayStation 5 console and Microsoft’s Xbox Series X and Series S platforms in 2020. New console launches have historically led to a cyclical upcycle for GameStop’s business and stock performance.

Pricing momentum created by the new hardware launches was further intensified by news that activist investor and Chewy co-founder Ryan Cohen was amassing a large stake in the company and would advocate for pushing the business toward an e-commerce focus.

From there, Reddit’s WallStreetBets group began championing the stock as a potential target for a huge short squeeze. Social media users noticed that enormous short interest had amassed against GameStop — and that a massive run for the stock could potentially be generated through a bit of favorable news and coordinated buying.

Prior to the first major short squeeze, GameStop had about 50 million shares of its stock outstanding. At the same time, roughly 70 million shares of the company’s stock had been sold short — meaning that investors had placed bets against more shares of the company’s stock than actually existed.

Short interest exceeding the company’s actual outstanding share count was made possible through a practice called naked short selling, which allows bets to be placed against shares that haven’t actually been borrowed. WallStreetBets members wound up being right about the squeeze, and GameStop bulls notched incredible gains as short-sellers were forced to buy back the stock at elevated levels in hopes of avoiding massive losses.

A combination of continued short-squeeze momentum and indications that the company would be aggressively pursuing its pivot to online retail have added new chapters to the story of GameStop’s incredible rally, and it currently stands as one of the best-performing stocks of the year. Cohen has been appointed chairman of a new committee to accelerate the business’s online retail push, a bounce for the stock has once again attracted new short interest, and the GameStop saga rages on.

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Article: GameStop stock surge lingo: Here’s what Reddit’s WallStreetBets vocabulary means

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GameStop stock surge lingo: Here’s what Reddit’s WallStreetBets vocabulary means

Katie Conner, 19 March 2021

Reddit’s community, WallStreetBets, is still assisting in the rise of GameStop’s stock, which is currently sitting at $272 per share and even hit an all-time high last week. Reddit users are battling it out with Wall Street to keep GameStop’s stock prices soaring while Wall Street expected a crash. Small investors are using Reddit communities to drive “meme stocks,” causing short sales and https://www.investopedia.com/terms/s/shortsqueeze.asp. And it’s not just GameStop. Other companies, like AMC and Nokia, have also been affected by the coordinated surge.

No, this doesn’t mean you should necessarily drop everything and fully invest in the stock of the moment. Some are calling the market manipulation a “Ponzi scheme,” and the stock price will likely even out once the hullabaloo dies down.

In fact, broker TD Ameritrade restricted trading of the GameStop and AMC stocks on Jan. 26 and continues to post an advisory note to clients about market volatility. Trading app Robinhood followed suit on Jan. 27 in response to the runaway growth — the company got itself into trouble by restricting stock trades and will be closely reviewed by the SEC (It’s currently limiting buys on AMC and GameStop stocks). The White House has said it’s monitoring the situation.

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Article: Stop the Game!: How To Chill Bubbles Sensibly

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Stop the Game!: How To Chill Bubbles Sensibly

John C. Coffee Jr., 17 March 2021

Much of the excited journalism on GameStop has focused on its asserted “Democratization” of the markets or the new “populism” sweeping Wall Street. This sort of commentary is the product of journalists being on tight publication deadlines and willing to generalize based on a data sample of one. Those of us who take a longer-term view see it differently: Bubbles are bad; GameStop was a bubble; and the influences that caused it (which were indeed new and novel) need to be chilled. Those who disagree with the last sentence should probably stop reading here.

But how you chill a bubble is not a simple question. Many commentators have unrealistic solutions: (1) Prosecute everyone (or at least those on Reddit) for manipulation; and (2) subject websites to tight regulatory controls. Such solutions, proposed by those who can reach legal conclusions faster than the average knee can jerk, face formidable obstacles. First, manipulation is a crime of intent that requires the actor to attempt willfully to move a stock price (up or down) to an “artificial” price that the actor knows is different than that which would be reached by the normal intersection of supply and demand in a fully informed market. Currently, the circuits are split, but both the U.S. Courts of Appeals for the Second Circuit and D.C. Circuit insist that the defendant must intentionally send a false pricing signal (such as a wash sale or a factually false statement). See Fezzandi v. Bear Stearns & Co., 777 F.3d 566 (2d Cir. 2015); Koch v. SEC, 793 F.3d 147 (D.C. Cir. 2015). Second, the First Amendment largely precludes any attempt to shut down social media. In addition, §230 of the Communications Decency Act gives immunity to websites, such as Reddit, for what their users say on them. Beyond that, mere statements of opinion—even manic opinions—are not fraudulent. Most of the lost souls on WallStreetBets sound like true believers, not cynical manipulators, and their prediction that GameStop was “going to the moon” were silly, but not fraudulent. According to Motley Fool, the average investor in a Robinhood account had an account balance (in 2020) between $1,000 and $5,000. A colleague tells me that his account balance on Draft Kings (a different betting venue) is greater than that. In short, Robinhood’s investors are not big-time and are probably feeling their losses keenly at this point.

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