Category: Hedge Fund News (Page 1 of 39)

The SEC Fines Ten Firms $79M for New Violations

The SEC has fined ten firms $79M for new violations related to communication policies according to the latest report.

On Friday the SEC charged broker-dealers and investment advisers — including Perella Weinberg Partners and Interactive Brokers — for “widespread and longstanding failures to maintain and preserve electronic communications”, reports Financial Times.

The companies charged on Friday admitted the SEC’s findings and acknowledged that they violated US securities laws, the regulator said.

Perella Weinberg and two of its affiliates, which reported their own violations, agreed to the lowest penalty of $2.5mn.

“One of the orders included in today’s announced actions is not like the others,” said Gurbir Grewal, director of the SEC’s enforcement division.

“There are real benefits to self-reporting, remediating and co-operating.”

Interactive Brokers Corp and an affiliate agreed to the highest penalty, at $35mn, and also faced a $20mn fine from the Commodity Futures Trading Commission for similar violations, reports FT.

According to the SEC, its probe of Interactive Brokers “uncovered pervasive off-channel communications at all seniority levels”. 

Robert W Baird & Co agreed to pay $15mn, and William Blair & Company and an affiliate paid $10mn.

The other businesses included Nuveen Securities and Fifth Third Securities.

The SEC recently fined Goldman Sachs $6 million for failing to provide complete and accurate securities trading information, known as blue sheet data.

According to the SEC’s order, over a period of approximately ten years, Goldman made more than 22,000 deficient blue sheet submissions to the SEC.

The order finds that, as a result of 43 different types of errors, these submissions contained missing or inaccurate trade data for at least 163 million transactions.

Citadel was also recently fined $7 million for illegal short selling violations.

While retail investors applauded the investigation, many said $7 million was merely a slap on the wrist for the financial crimes.

For Five Years Citadel Marked Short Sales As Long

Market News Today - The SEC Fines Ten Firms $79M for New Violations.
Market News Today – The SEC Fines Ten Firms $79M for New Violations.

For five years Citadel incorrectly marked short sales as long sales and vice versa according to the SEC’s latest report.

Retail investors have created an uproar on social media for two primary reasons.

  1. Citadel was only fined $7 million — which investors allege is merely a ‘pay to play’ fine.
  2. Citadel’s naked short selling “conspiracies” ended not being conspiracies, despite Bloomberg and WSJ journalists idolizing Citadel’s Ken Griffin.

For years now, retail investors have raised concerns over Citadel’s hedge fund and market making power, claiming there is simply too much conflicts of interest.

The Securities and Exchange Commission says the market maker violated a provision of Regulation SHO, the regulatory framework designed to address abusive short selling practices, which requires broker-dealers to mark sale orders as long, short, or short exempt.

According to the SEC’s order, for a five-year period, it is estimated that Citadel Securities incorrectly marked millions of orders, inaccurately denoting that certain short sales were long sales and vice versa.

“Compliance with the order marking requirements of Reg SHO is a key component of regulatory efforts to curtail abusive market practices, including ‘naked’ short selling,” said Mark Cave, Associate Director of the SEC’s Division of Enforcement.

“This action against Citadel Securities demonstrates that a broker-dealer’s failure to comply with the requirements of Reg SHO can have negative downstream consequences on the accuracy of the firm’s electronic records, including its electronic blue sheet reporting, depriving the Commission of important information about the markets it regulates.”

Investors on social media say Citadel’s punishment is miniscule compared to the institutions massive gains it claims to have made, especially in the past years.

Keep in mind, Madoff never lost either.

Also Read: “The Game is Rigged”, Says Ex-Citadel Data Scientist

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Market News Today - The SEC Fines Ten Firms $79M for New Violations.
Market News Today – The SEC Fines Ten Firms $79M for New Violations.

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Hedge Funds Spend Billions to Attack The New SEC Rules

Market News Today - Hedge Funds Spend Billions to Attack The New SEC Rules.
Market News Today – Hedge Funds Spend Billions to Attack The New SEC Rules.

Private equity, capital ventures, and hedge funds are spending billions to attack the new and approved SEC rules according to Financial Times.

“The US Securities and Exchange Commission’s decision last month to adopt sweeping new rules for the private fund industry is prompting some smaller fund managers to look for their first full-time general counsels and chief compliance officers.

Larger firms are considering not only whether to recruit more staff, but also the need for different kinds of lawyers in light of new rules that will change the way they interact with their investors.

And the entire industry is gearing up to invest more on compliance and reporting technology,” reports FT.

Industry groups have lobbied furiously against the proposals since they were first put forward in February 2022, saying institutional investors should be free to make their own deals with fund managers.

The rules, which were recently passed on a 3-2 vote, aim to provide investors with detailed quarterly reports on performance and increased disclosure on expenses and provide overall greater transparency.

“Economically, our investors, large or small, benefit from greater transparency and integrity,” SEC chair Gary Gensler said after the vote.

“These are significant enhancements in the capital markets.”

“These rules will help protect workers’ pensions and create a more transparent and accountable private funds market,” said Senator Sherrod Brown, who chairs the banking committee.

But Wall Street is pushing back and so are lobbied regulators tied to the big players.

The rule “is unnecessary government interference . . . [that] will squelch competition in the name of enhancing it,” said Hester Peirce, an SEC commissioner who has close ties to a lobbyist group of anti-regulators.

The new rules would impose “significant costs” and big changes on the industry, said Elizabeth Shea Fries, partner at Sidley.

“This is trying to make private funds more like registered funds.”

Hedge Funds Are Doing Anything Possible to Stop These Rules

Market News Today - Hedge Funds Spend Billions to Attack The New SEC Rules.
Market News Today – Hedge Funds Spend Billions to Attack The New SEC Rules.

Representatives of private equity firms, venture capitals, and hedge funds have lobbied lawmakers to disrupt new proposed SEC rules, reports WSJ.

In July, the SEC finalized new transparency regulations meant to shed light on the U.S money market fund industry.

“The amendments will revise the primary rule that governs money market funds to remove the ability for a fund board to temporarily suspend redemptions if the fund’s liquidity falls below a threshold.

These money market funds will be required to provide daily disclosure of the percentage of its total assets invested in weekly liquid assets (as well as daily assets) on their website to provide transparency to investors and “increase market discipling”.

Private-equity and hedge funds are bracing for what could be the biggest regulatory challenge in years to their business of managing money for deep-pocketed investors, says WSJ.

“Since the agency first proposed new rules for the industry last year, representatives of private equity, hedge funds and venture capital have met frequently with SEC officials to try to dissuade them, SEC meeting logs show.

They have lobbied lawmakers to push back against the SEC’s plans and formed a group to fight the final rules, which could differ from the proposal.”

“Investors need increased transparency, more informative and useful data, and prohibitions on abusive and conflicted practices,” Sen. Elizabeth Warren and seven other Democratic senators wrote in a May 15 letter urging Gensler to complete the rules.

Also Read: A New Bill is Being Introduced to Fire Gary Gensler

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Market News Today - Hedge Funds Spend Billions to Attack The New SEC Rules.
Market News Today – Hedge Funds Spend Billions to Attack The New SEC Rules.

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“The Game is Rigged”, Says Ex-Citadel Data Scientist

Ex-Citadel employee Patrick McConlogue says the market is rigged.
Market News Daily: Ex-Citadel employee Patrick McConlogue says the market is rigged.

Patrick McConlogue, an ex-Citadel Data Scientist said during the ‘meme stock’ frenzy that the stock market is rigged, claiming he helped design it.

“The game is not fair and it never has been. Individual investors, even when operating in a swarm, are destined to lose. How do I know? I helped design the game.”

Not many investors know this, but Patrick actually breaks down how Citadel and other hedge funds were able to make billions back in only weeks from halts.

In this article, I’m going to share his words and knowledge in the industry directly with you.

Share this article to raise awareness of the market injustices ‘experts’ have claimed were never true.

Your voice matters.

Let’s get started.

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Ex-Citadel Employee Reveals Rigged Trading Game

Ex-Citadel employee Patrick McConlogue says the market is rigged.

Patrick McConlogue appeared on Fox Business during the ‘meme stock’ frenzy of 2021 when retail investors created one of the biggest scares in Wall Street history.

GameStop and AMC shareholders were able to create panic on Wall Street by heavily buying shares of the overleveraged shorted stocks.

As share prices soared, short sellers experienced massive losses.

GameStop was able to put Melvin Capital out of business, but Patrick McConlogue says other hedge funds were able to make back billions in losses during the halt.

The halts allowed hedge funds to enter AMC and GameStop knowing shares would plummet, allowing them to capitalize on the deflation of the price.

Patrick says the rules of the game also heavily favor hedge funds, something retail investors have urged SEC Chairman Gary Gensler for years to change.

“I respect many of my colleagues, the problem isn’t the people, it’s the rules of the game which heavily favor the funds.”

Below is ex-Citadel Data Scientist Patrick McConlogue’s story.

AMC Stock: The SEC Has Now Violated Threshold Rule

Patrick McConlogue Says the Stock Market is Rigged

Ex-Citadel employee Patrick McConlogue says the market is rigged.
Ex-Citadel employee Patrick McConlogue says the market is rigged.

“The game is not fair and it never has been. Individual investors, even when operating in a swarm, are destined to lose.

How do I know? I helped design the game.

A few years ago, I worked at the massive hedge fund Citadel. The multi-billion dollar fund was caught up in this week’s scandal for bailing out hedge fund Melvin Capital after everyday traders on Robinhood appeared close to liquidating the fund through mass buying of the GameStop stock $GME.

My role at Citadel was as an engineer in Long Term Quantitative Strategies. The entire department, filled with programmers and compliance officers, is dedicated to something called ‘alpha’ which determines the buying strategy of the fund.

I was responsible for innovative proprietary technology that capitalizes on public data faster than any other hedge fund. It’s a classic situation of machines against humans. I respect many of my colleagues, the problem isn’t the people, it’s the rules of the game which heavily favor the funds.

A group of traders on the r/WallStreetBets Reddit thread, now consisting of over 8.6M members, noticed that someone had overly “shorted” the GameStop $GME stock.

They decided it was the perfect time to buy. It was only around $18 per share and easily affordable for the common investor who kept buying, driving up the price of the stock.

As the buying frenzy continued the hedge funds who had taken the opposite position started to hemorrhage money.. BIG money.

The small investors celebrated their success online as news broke that the hedge fund Melvin Capital Management had lost so much on the $GME short position that they had to be bailed out by bigger hedge funds.

While the markets were closed Melvin Capital’s sinking battleship received an emergency infusion of $2.75 billion from Citadel and Point72.”

‘Meme Stock’ Halts

Ex-Citadel employee Patrick McConlogue says the market is rigged.

“On Thursday morning, Robinhood — the commission-free stock trading app used by small investors — suddenly shut down buys on $GME and a few other stocks that were under siege.

Only sell orders went through, reversing the trend, driving the stock prices back down and shoring up the hedge funds’ sinking ships. Remember, when the stock price goes down, the people who hold the “shorts” make money.

This started a chain reaction. Other retail trading platforms like E*Trade and TD AmeriTrade began freezing the stock for individual investors. But hedge funds own supercomputers.

They have direct access to stock markets. While small investors were frozen the hedge funds traded massive positions and quickly earned back the billions in losses from the past few days.

The rules of the game had been exposed, in broad daylight no less.

Robinhood users, when signing up for the popular trading app that offered “free trading” were likely unaware of their role in the hedge funds’ ability to reap huge profits.

The system is broken.”

Patrick McConlogue left Citadel for decentralized finance and co-founded a new technology called Overline that takes the philosophy of DeFi to the extreme.

Not only is Overline unable to freeze any of your assets but it can’t even turn off the exchange; it’s not possible.

You can read Patrick’s full write-up here.

Related: Ken Griffin Thanks Redditors for ‘Meme Stocks’

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Market News Today - Ex-Citadel data scientist says the market is rigged.
Market News Today – Ex-Citadel Data Scientist says the market is rigged.

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Will Shareholder Value Recover After AMC’s New Proposals?

Market News Daily - Will Shareholder Value Recover After AMC's New Proposals?
Market News Daily – Will Shareholder Value Recover After AMC’s New Proposals?

Will Shareholder value recover after AMC Entertainment’s (NYSE:AMC) newly approved proposals?

Shareholder value has dropped significantly and now investors are looking at CEO Adam Aron and other anonymous social media influencers for answers, but especially at our regulators.

AMC stock fell nearly -11% on Monday and is currently down more than -59% following the 1-for-10 reverse stock split and APE conversion.

Last week, Wedbush upgraded AMC Entertainment from ‘underperform’ to ‘neutral’ with analysts currently looking at a 17.98% upside, Nasdaq reported.

However, AMC stock has only fallen to all-time lows — many shareholders continue to voice concerns surrounding the suppression of the movie theatre stock and conclude some type of fraud is at play.

In the past month, we’ve seen a series of events that have led to rather alarming signals from the market, one being the number of days AMC has been on the NYSE Threshold Securities List.

As of Friday, AMC has now been on the threshold list for 45 consecutive days.

No signs of regulation from the SEC has been spotted — the major sign being a purchasing of shares in the market after 13-consecutive days being listed, which the SEC has now violated.

“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’.

Will shareholder value recover after AMC’s newly approved proposals? Unless investors are able to drive enough momentum to trigger short sellers to close, as seen in 2021, it’s a flip of a coin.

But I’m curious to hear what you think, leave a comment down below.

Also Read: What New MULN and BBIG Reverse Splits Have Taught Us

Latest AMC Stock News and Updates Today

Market News Daily - Will Shareholder Value Recover After AMC's New Proposals?
Market News Daily – Will Shareholder Value Recover After AMC’s New Proposals?

Financial analytics firm Ortex is now reporting a massive drop in AMC short interest, an indication that short sellers have closed their positions. Is this a mistake on their end?

The drop represents a -47.65% decline in short interest with figures such as utilization also dropping another -42.48% according to the firm’s data.

On social media, AMC investors argue that the data is not accurate.

Here’s what Ortex says about its short interest data:

“In the US, stock exchanges only publish short interest data twice a month and this data is also delayed by eight trading days, leaving investors in the dark regarding daily short selling activity. 

In addition, in Europe, financial institutions are only required to flag to the local regulator whenever they go over or back under certain thresholds.

This provides valuable and timely additional data but only on positions above the reporting threshold.

ORTEX add these flags intra-day as soon as the regulator publishes them, aggregates an institution’s overall current short position and lists all the latest flags so users get an accurate idea of latest sentiment.

ORTEX Short interest data is sourced from the world’s largest combined pool (over 700k pools of liquidity) of Agent Lenders, Prime Brokers, and Broker-Dealers who submit their inventory.

As the US exchange data is delayed ORTEX fills this void with daily up‑to‑date information from the global securities finance market and enables users to gauge changes in investor sentiment.

This data is updated by 7.30am EST each day with current stock borrows, meaning you won’t find more timely or accurate data. 

ORTEX looks at the number of shares being borrowed, because you need to borrow a stock in order to short it.

In addition to seeing how many shares are out on loan (both as the actual numbers of shares, as a percentage of free-float and as a ratio of average volume (DTC)), this dataset also shows the average interest rate for current loans (Cost to Borrow) as well as the utilization.

Utilization shows how many percent of the lendable shares are currently lent out.”

Also Read: Everything You Need to Know About an AMC Short Squeeze

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Market News Today - Will Shareholder Value Recover After AMC's New Proposals?
Market News Today – Will Shareholder Value Recover After AMC’s New Proposals?

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