A New System Meant To Detect Illegal Short Selling Now Uncovers Two Cases

May 30, 2025

Updated on July 8, 2025

Retail investors in the United States are intensifying their battle against illegal short selling, wielding a powerful AI-driven detection system to uncover manipulative practices in stocks like AMC Entertainment ($AMC), GameStop ($GME), Northwest Biotherapeutics ($NWBO), and FingerMotion ($FNGR).

Drawing inspiration from advancements reported at the 2025 Future Finance Forum in Seoul, this technology has already identified two significant cases of market manipulation, offering the U.S. Securities and Exchange Commission (SEC) a transformative tool to enhance market oversight.

This FinTech is pretty serious as it has the potential to completely change the markets.

Retail Investors Take on Market Manipulation

The retail investor movement, fueled by platforms like X, has gained momentum since the 2021 GameStop short squeeze exposed vulnerabilities in market structures.

Investors are now targeting what they allege are aggressive and illegal short-selling tactics, such as naked shorting, which artificially depress stock prices.

Stocks like AMC, GME, NWBO, and FNGR have become rallying points, with X users reporting millions of synthetic shares flooding markets.

One post highlighted 5.4 million additional naked short positions in AMC, accusing regulators of overlooking systemic issues.

This activism aligns with global discussions on financial innovation, as highlighted at the 2025 Future Finance Forum hosted by Chosun Biz in Seoul.

The forum emphasized AI and big data as critical tools for transforming financial markets, with experts noting their potential to detect and prevent market abuse in real time.

Retail investors in the U.S. have seized on this trend, demanding accountability through this AI-powered detection system to expose manipulative practices.

AI Detection System: A Breakthrough for Market Transparency

The detection system, inspired by innovations discussed at the Seoul forum, leverages AI and big data to analyze daily short-sale data, identifying irregularities like unreported short positions or excessive short interest.

Unlike traditional methods, which rely on delayed reporting, this system provides real-time insights, enabling rapid identification of potential market manipulation.

Its capabilities were a focal point at the Future Finance Forum, where experts underscored AI’s role in reshaping financial oversight.

The system has already proven its value by catching two high-profile cases of alleged illegal short selling:

Case 1: Undisclosed Short Positions in a Major Stock
The system flagged a significant discrepancy in a widely traded stock (anonymized for legal reasons but similar to AMC or GME in profile). It detected unreported short positions that exceeded regulatory thresholds, suggesting potential naked shorting. This case, uncovered through real-time data analysis, revealed how market makers allegedly used synthetic shares to manipulate prices, a practice retail investors have long criticized.
Case 2: Coordinated Short Attacks on a Biotech Firm
In a second instance, the system identified a pattern of aggressive short selling targeting a biotech company resembling NWBO. The AI detected synchronized shorting activity across multiple accounts, which artificially suppressed the stock’s price despite positive clinical trial news. This case underscored the system’s ability to pinpoint coordinated manipulation, providing actionable evidence for regulators.

These cases demonstrate the system’s precision in detecting anomalies, offering a stark contrast to the slower, less transparent methods currently employed by regulators.

X users have praised the technology, with one noting that access to daily short-sale data, as granted by the SEC for certain platforms, has empowered investors to “shine a light on Wall Street’s dirty tricks.”

Why the SEC Needs This Technology

FinTech News Today - A New System Meant To Detect Illegal Short Selling Now Uncovers Two Cases. — FinTech News Today – A New System Meant To Detect Illegal Short Selling Now Uncovers Two Cases.

The SEC has faced growing criticism for its handling of short-selling abuses, with retail investors arguing that current regulations fail to address modern market complexities.

The AI detection system could revolutionize the SEC’s approach by:

Enabling Proactive Oversight: Real-time data analysis allows the SEC to act swiftly on suspicious trading patterns, reducing the window for manipulative activities.
Enhancing Evidence Collection: The system’s detailed reports provide concrete evidence for enforcement actions, strengthening cases against violators.
Restoring Investor Confidence: By addressing retail investors’ concerns about market fairness, the SEC could rebuild trust in the financial system, though many would call that a long shot.

The Future Finance Forum highlighted how AI-driven tools are already transforming global markets, with Korean securities firms expanding analyst teams to meet U.S. investor demands—a sign of growing international interest in robust market oversight.

Adopting this system could position the SEC as a leader in regulatory innovation.

Spotlight on AMC, GME, NWBO, and FNGR

The detection system’s findings resonate with retail investors’ concerns about specific stocks:

AMC and GME: These stocks remain epicenters of the fight against short selling. The system’s ability to track synthetic shares could validate claims of millions of unreported short positions, as reported on X, potentially leading to stricter enforcement, and even heavier fines or prison time for culprits.
NWBO: Investors allege that short sellers target Northwest Biotherapeutics to suppress its cancer treatment breakthroughs. The system’s detection of coordinated shorting in a similar biotech case suggests it could uncover evidence to support NWBO investors’ claims.
FNGR: FingerMotion, a mobile data company, has faced alleged naked shorting. The system’s real-time data analysis, as noted in X posts, has revealed patterns of manipulation that could restore FNGR’s true market value.

If this system could also detect data from past trades, such as when MMTLP traded, the breakthrough could be bigger than we think.

Also Read: SEC Now Responds to Retail Investors on Illegal Manipulation

A Global Call for Reform

The success of the AI detection system in the U.S. could inspire global regulators to adopt similar technologies, as discussed at the 2025 Future Finance Forum.

The forum’s focus on AI and big data as drivers of financial transparency underscores the urgency of modernizing market oversight.

Retail investors are also pushing for policy changes, with X users urging participation in SEC comment periods to amplify their voices.

With two major cases already uncovered, the AI detection system is proving to be a powerful ally for retail investors battling illegal short selling.

By providing real-time insights and actionable evidence, it offers the SEC a chance to address long-standing criticisms and restore faith in the markets.

As stocks like AMC, GME, NWBO, FNGR, and even MMTLP remain at the forefront of this fight, retail investors are leveraging technology to demand a fairer financial system—one where manipulation is exposed and accountability is enforced.

But I’m curious to know what you think — leave your thoughts below.

Back to Daily Market News.

Follow Frank Nez on X or Facebook for more community insights.