The SEC has now violated the 13-day Threshold Securities List rule for AMC Entertainment (NYSE:AMC) which states that a broker-dealer must immediately close out all fail-to-deliver positions by purchasing shares in the open market.
As of Friday, September 1st, AMC has now been on the threshold list for 50 consecutive days and pricing has not reflected indication of strong purchasing in the past weeks.
“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”, said Yahoo’s Senior Markets and Data Reporter Jared Blikre.
He says a company joining the NYSE Threshold Securities List is a clear indication of manipulation in the market, primarily through ‘naked short selling’, which Wes Christian says is a worldwide problem.
AMC Entertainment 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).
And in July, FTDs saw as much as $60 million, or 14.1 million FTDs in one single day.
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.
Is Anything Being Done About AMC’s High FTD Rate?
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.”
In August, the CEO released the following update:
“Many of you are incensed by the high number of “Fail to Deliver” AMC shares, and that AMC again has been on the Threshold List for multiple weeks. We repeatedly have gone to the NYSE and FINRA, and did so again in July, to put and keep this entire situation on their radar,” said the CEO on FTDs this month.
The high reportings of FTDs in AMC Entertainment stock suggest an unnatural occurrence of events that all point towards some sort of discrepancy, manipulation or not.
The CEO has said in the past that he has not seen any signs of synthetic shares, with reason too since AMC’s lenders, who are also short on the stock, have complicated binding agreements with the CEO.
In the meantime, we’re seeing companies such as Hycroft Mining, Mullen Automotive, Genius Group, and Meta Materials investigating what they believe to be an attack on their company stock via naked short selling.
Some investors wonder if AMC Entertainment is already investigating these possibilities behind-the-scenes.
But I’m curious to know what you think. Leave your thoughts in the comment section of the blog down below. Share this article to raise awareness.
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