AMC Entertainment (NYSE:AMC) FTDs surged big in the end of June according to the latest report by Stocksera.
By June 30th, the number of fails-to-deliver that day surpassed more than 12.9 million, equivalent to more than $57 million.
In April, AMC hit all-time highs when FTDs soared between 17 million and 18 million, equaling $85.4 million (non-cumulative).
FTDs, or Failure-to-deliver occurs when one party in a trading contract (whether it’s shares, futures, or options) fails to deliver on their obligations.
These failures derive due to buyers not having enough money to take delivery and pay for the transaction at settlement.
In the case of sellers, it means not having the goods to meet that transaction.
Failure-to-delivers can occur in options trading or when selling short naked, per Investopedia.
In April, AMC CEO Adam Aron announced that the company had contacted both FINRA and the NYSE to look closely at the trading of their stock primarily due to the high number of FTDs.
“Many of you, and we, are aware that AMC Entertainment has been on ‘The Threshold List‘ for 3+ weeks, indicating a number of FTDs.
Some of you may be pleased to learn that we have contacted both FINRA and the NYSE asking that they both look closely at the trading of our stock.”
However, the CEO has not given investors an update or report on what regulators have said after months of his statement.
Are FTDs a Sign of ‘Naked Short Selling’?
Investopedia certainly says so, and so does Yahoo’s Senior Markets and Data reporter Jared Blikre.
However, Adam Aron has a take closer to Bloomberg’s, there’s no evidence of it, he said in June of 2022.
Whether the CEO changes his mind this year is something we have yet to see.
AMC’s Hycroft recently opened an investigation with reason to believe that the company has been targeted by illegal short selling which has also led investors to believe that AMC might be working on something behind-the-scenes.
“If a hedge fund releases a short report on a stock, they can short it, but they have to pay a borrowing fee.
They have to borrow it from somebody so they don’t engage in naked short selling, which increases the amount of shares and the float of the company.
Now market makers like those at the New York Stock Exchange– Citadel is one. They can engage in naked short selling, and it’s perfectly legal. It’s part of their market-making duties to provide liquidity for a stock,” reports Blikre.
“Sometimes there are fails to deliver, and a fail to deliver is when you don’t have the ability to prove that you borrowed the stock legally before you actually shorted it,” he continued.
AMC Entertainment stock is currently up more than +11% this year-to-date and down more than -73% in the past year.
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