Market News Daily – Citadel Draws Fresh Scrutiny from SEC in New Risky Bets.
Citadel amongst other hedge funds is under fresh scrutiny from the SEC due to risky bets that are heightening systemic risk in an already shaky economy.
Officials at the Securities and Exchange Commission and the Federal Reserve have questioned prime brokers about leveraged trading as “the dangers have been heightened due to political brinkmanship around the debt ceiling that has threatened to sink the US into default and unleash chaos in financial markets”, per Bloomberg.
“Several of the hedge funds that have recently pursued the so-called basis trade were also active in 2020, when the outbreak of the pandemic upended the Treasury market and caught them wrong-footed until Fed officials intervened to restore normalcy.”
Basis trading is a trading strategy that seeks to profit from perceived mispricing of securities, capitalizing on small basis point changes in value.
The list includes Citadel, Millennium Management, ExodusPoint Capital Management and Capula Investment Management, according to people familiar with the matter.
“Opaque and risky, the strategy has long spooked watchdogs. It involves borrowing heavily in the repurchase market and using that leverage to exploit the price gap between Treasury futures and the underlying cash market.
The trades, in some cases, have been levered 50-to-1, according to two of the people,” says Bloomberg.
The strategy’s popularity is alarming to SEC Chair Gary Gensler, who is on a mission to subject large speculators to more regulations.
“There’s a risk in our capital markets today about the availability of relatively low margin — or even zero margin — funding to large, macro hedge funds,” said Gensler, in response to a Bloomberg News inquiry about the rise of the investing style.
The Fed Has Gotten Involved
Market News Daily – Citadel Draws Fresh Scrutiny from SEC in New Risky Bets.
The New York Fed said in a statement that it “regularly reaches out to a wide range of market participants to gather information on financial market developments, and this outreach is consistent with typical market intelligence gathering.”
Officials have been asking about current margin requirements and how a default, or a downgrade to the US’s credit rating, would impact the market plumbing including the value of collateral, the people said.
“Financial watchdogs are under pressure after having been blindsided repeatedly by instability in the bond market since the pandemic erupted”, says Bloomberg.
Fed officials at the policy meeting earlier this month expressed concerns about the risks lurking outside the banking system in light of recent financial stresses.
Minutes released Wednesday singled out “hedge funds, which tend to use substantial leverage and may hold concentrated positions in some assets with low or zero margin.”
This means hedge funds such as Citadel and Millennium have been able to short the markets with unlimited leverage and low to zero margin to hold them accountable for any particular losses.
The question is why have regulators allowed this risky strategy to occur in the markets for too long.
Hedge funds such as Citadel have been targeting small cap companies in efforts to profit big from the possibility of bankruptcy.
The hedge fund recently became known for shorting and capitalizing from a cancer research company.
ExodusPoint and Capula were caught out while Millennium closed several so-called trading pods in the crisis.
“For Citadel, the impact was smaller. The firm’s current positioning in the trade isn’t the largest it’s been historically,” one of the people told Bloomberg.
Representatives for Citadel, Millennium, ExodusPoint and Capula declined to comment on their current exposures.
The increase in short-futures positions by hedge funds that use massive leverage is hitting records.
“That’s a sign speculators are seeking to profit from a mismatch in pricing between Treasury futures and the cash market. Since the strategy typically yields minuscule returns, hedge funds borrow in the repo market to amplify gains,” says Bloomberg.
A new intraday margin call rule is hitting Wall Street hard as the SEC plans to bolster the resiliency and integrity of the market.
The U.S. Securities and Exchange Commission last week voted on the proposal that would require clearing houses to monitor margin exposures on an ongoing basis and give them the authority to make intraday margin calls as frequently as circumstances warrant, per Reuters.
The new intraday margin call rule was inspired by the ‘meme stock’ frenzy of 2021.
Specifying the ongoing monitoring of intraday exposure, and under what circumstances intraday margin calls would be made, would strengthen clearing houses’ risk management and give greater transparency around how they manage intraday risk, the SEC said.
“Intraday margin calls have been important in our markets just in the recent past,” SEC Chair Gary Gensler said during a SEC open meeting ahead of the vote on the proposal.
However, that regulation won’t go into effect until the end of the year.
Market News Published Daily
Market News Today – Citadel Draws Fresh Scrutiny from SEC in New Risky Bets.
For stock market, business news and updates,join the newsletterto receive weekly market news and notifications straight to your inbox.
Franknez.com is the media site that keeps retail investors informed.
Market News Daily – Ken Griffin Lobbied His Way Out of “Meme Stock” Scandal.
Citadel’s Ken Griffin lobbied his way out of the “meme stock” scandal of 2021 when Citadel and Robinhood colluded just a night prior to the trading halts.
On February 18, 2021, he testified before the House Financial Services Committee about his role in the ‘meme stock’ controversy.
However, Ken Griffin donated money directly to four members of the committee, Republicans French Hill, Andy Barr, Ann Wagner, and Bill Huizenga, per Chicago Business.
The retail community is raising awareness of these actions today when lobbied congressmen still have the power to sweep market injustices under the rug.
Investors on social media say that in other places of the world this is called bribery.
“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,” said ex-Citadel Data Scientist Patrick McConlogue.
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.
Citadel and Robinhood Colluded But There Was No Justice for Investors
Market News Today – Ken Griffin Lobbied His Way Out of “Meme Stock” Scandal.
The U.S. House Committee on Financial Services published a press release stating Robinhood and Citadel Securities engaged in ‘blunt’ negotiations before the trading of ‘meme stocks’ occurred.
The press release states that talks regarding lowering PFOF (payment for order flow) rates happened just a night before trading restrictions.
The “GameStopped” report issued by the U.S. House Committee on Financial Services greatly details how the NSCC saved Robinhood from defaulting due to failing to meet collateral obligations.
On January 28th, 2021, Robinhood routed orders to six market makers for equities: Citadel Securities, G1 Execution Services, Morgan Stanley, Two Sigma Securities, Virtu, and Wolverine.
The conversations between Robinhood and Citadel were tense as the two negotiated the price of PFOF rebate rates and price caps for AMC and GameStop.
Furthermore, Robinhood received a massive waiver of its deposit requirement from the DTCC.
And according to the report, without this waiver, Robinhood would have defaulted on its regulatory collateral obligations.
NSCC officials say the waiver was necessary to avoid systemic risk to the market.
According to Business Insider, the court said at the time that the evidence between Citadel Securities and Robinhood was not sufficient.
But there is now a new lawsuit against Robinhood in 2023 which alleges that on January 28, 2021, Robinhood prohibited purchases of the stocks underlying the affected options on its platform and also prohibited purchases of the exercise of the affected options, and only allowed the closing out of such positions.
The lawsuit further alleges that during the period January 29, 2021 through February 4, 2021, Robinhood imposed significant limits on any purchases and continued to prevent the exercise of the affected options on its trading platform.
Consequently, the value of the affected options dropped dramatically and remained suppressed throughout the month, causing investors to suffer big losses, says the press release.
Ken Griffin’s Citadel may have been able to lobby themselves out of the situation, but Robinhood has litigation matters to attend to this year.
This raises questions about how government officials will ever be able to aid retail investors when lobbied congressmen can easily take opposing sides.
Market News Published Daily
Market News Today – Ken Griffin Lobbied His Way Out of “Meme Stock” Scandal.
For stock market, business news and updates,join the newsletterto receive weekly market news and notifications straight to your inbox.
Franknez.com is the media site that keeps retail investors informed.
Market News Daily – Elon Musk’s New Litigation Team is Taking on Wall Street.
Tesla Inc. (NASDAQ:TSLA) and SpaceX CEO Elon Musk says his new litigation team will go after Wall Street short sellers and other corrupt regulators.
Brandon Ehrhart, General Counsel and Corporate Secretary at Tesla posted on LinkedIn more details.
“Are you an experienced partner at a top law firm?
Do you enjoy handling sophisticated litigation and trials but are frustrated by internal issues like conflicts and passing on work for clients you love?
Tesla Legal is building something unique: a full-scale internal litigation and trial team that can handle all aspects of litigation and trial work, including briefings, hearings, discovery, depositions and trials, completely in-house.
Apply online and see if you qualify for a team that handles cutting-edge and sophisticated legal work itself with NO conflicts.
Because we are one team with one mission: to accelerate the world’s transition to sustainable energy.”
Elon Musk responded to the publication on Twitter sharing Brandon Ehrhart’s LinkedIn post with the following statement:
“Tesla will continue to use outside litigators, but it’s important to build a powerful litigation team internally, so that we’re not always on the defensive.
We’ll also go after the Wall St short-sellers, certain law firms & (sometimes) corrupt regulators who are the true evil.”
Tesla will continue to use outside litigators, but it’s important to build a powerful litigation team internally, so that we’re not always on the defensive.
We’ll also go after the Wall St short-sellers, certain law firms & (sometimes) corrupt regulators who are the true evil.
Musk’s war with short sellers goes beyond advocating for his company.
He spoke out against shorts during the ‘Meme Stock’ frenzy of 2021, when large groups of retail investors on Reddit squeezed short sellers from their short positions in GameStop, AMC, and other companies.
“u can’t sell houses u don’t own u can’t sell cars u don’t own but u *can* sell stock u don’t own!? this is bs — shorting is a scam legal only for vestigial reasons,” Elon said in a tweet in January 2021.
Failure in Regulation for Short Selling in America
Regulators have strengthened punishment for naked short selling in South Korea and other parts of the world.
For example, The Financial Investment Services and Capital Markets Act of South Korea was revised in April 2021 so that illegal short sellers will face pecuniary penalties instead of fines.
According to the amended act, the maximum pecuniary penalty is equal to the amount of illegal short selling.
In addition, violation may lead to at least one year in prison or a fine equivalent to 300 to 500 percent of the illegal profit or avoided loss.
This model is raising attention in the United States as the predatorial practice has dominated the industry for decades.
But CEOs such as Roger Hamilton of Genuis Group (GNS) and John Brda, formerly of Torchlight/Meta Materials, and others have begun to take legal action against naked short selling.
The retail community has raised awareness through social media activism and peaceful protests, as seen on Occupy The SEC 2023, of the market injustices investors face today.
One of the most recent and most alarming frauds in Wall Street takes shape in theFINRA and MMTLP scandal – where investors’ money disappeared out of thin air when the self-regulatory agency halted buying and selling prior to delisting the ticker completely.
MMTLP shareholders have their money stuck in limbo with Project Veritas founder James O’Keef now looking at the story.
And with Elon Musk’s new litigation team going after Wall Street short sellers, it certainly brings about a new confidence in the possible changes that may occur in the markets this decade.
Market News Published Daily
Market News Today – Elon Musk’s New Litigation Team is Taking on Wall Street.
For stock market, business news and updates,join the newsletterto receive weekly market news and notifications straight to your inbox.
Franknez.com is the media site that keeps retail investors informed.
Market News Daily – Wall Street Threatens to Sue SEC if New Proposals Pass.
Wall Street is threatening to sue the SEC if proposals that will change how retail orders are executed gets passed.
Gensler has been critical of payment for order flow (PFOF), whereby some retail brokers (including Schwab, ETrade and Robinhood) route orders to electronic market makers known as wholesalers (including Citadel and Virtu), who pay the brokers for access to that order flow.
These wholesalers may send the orders to exchanges and profit from spreads or even from price direction through the derivatives market, hence the major conflict of interest.
SEC Commissioners Hester Peirce and Mark Uyeda, both Republicans, also filed statements opposing the proposal.
“This latest effort to order competition threatens to create disorder in the capital markets, the functioning of which is so important to the rest of our economy,” Peirce wrote in a statement.
The Intercept wrote a piece on Hester Peirce in 2015 titled, “SEC Nominee To Oversee Wall Street Works At Think Tank Dedicated To Blocking Regulation.”
And according to the research, Hester Peirce received 98% of her salary from the Mercatus Center, a “think tank” that provides an academic façade to a radical anti-regulatory agenda.
In other words, Hester is a plant on the SEC meant to cater to Wall Street, not retail investors.
‘We The Investors’ Challenges Wall Street
‘We The Investors’ is taking Wall Street head on.
More than 1,300 letters have been submitted to the SEC supporting rules proposed in December that represent the biggest changes to equities trading in nearly two decades, according to Reuters.
The collective of retail investors have joined ‘We The Investors’ led by Dave Lauer in efforts to combat Wall Street as a legitimate organization that sprouted from the events of the ‘meme stock’ frenzy in 2021.
We The Investors has held two online meetings since December with SEC Chair Gary Gensler, who took questions directly from retail investors on the proposals, which include requiring most retail stock orders to be sent to auctions to boost competition.
Other proposed rules call for a new standard for brokers to demonstrate they’ve gotten the best execution for clients on transactions, as well as lower trading increments and access fees on exchanges, and stronger disclosure around retail order executions.
But Wall Street is pushing back.
The NYSE teamed up with retail broker Charles Schwab Corp and market maker Citadel Securities earlier this month to ask the U.S. Securities and Exchange Commission to withdraw two recently proposed rules aimed at revamping how stocks trade.
The move represents a coordinated industry push back against what are potentially the most impactful proposals in the SEC’s biggest attempt to reform stock market rules in nearly 20 years.
The Securities and Exchange Commission scrapped plans to vote Wednesday on a rule that would have increased regulators’ visibility into financial risks at some hedge funds and private equity funds.
After scheduling the vote last week, the five-member commission “decided to take a little more time” on the rule, an SEC spokeswoman said.
The SEC Faces Potential Lawsuits from Wall Street
Market News Today – Wall Street Gets Ready to Sue SEC if Proposals Pass.
Wall Street institutions are already threatening litigation if the proposals go through.
“Ultimately, it’s going to end up, unfortunately, sadly, probably in litigation [if Gensler] decides to go down this road,” Virtu CEO Doug Cifu said in an interview at the Securities Traders Association of New York conference on March 27th at the NYSE.
Cifu specifically cited the Administrative Procedures Act (APA), which governs the way government agencies may propose and establish regulations.
The SEC must follow procedures outlined in the APA. If not, it can get sued.
Gensler is proposing a new rule, Regulation Best Execution, that would establish a national best execution standard to ensure broker-dealers send orders to the venue that will get the best price for buyers and sellers.
But FINRA is currently in control of the best execution rule, a rule Gensler believes the SEC should have, not FINRA.
FINRA is under serious scrutiny due to many scandals with the most recent having to do with the U3 halt and delisting of MMTLP stock.
Retail investors have also criticized the SEC for kneeling to Wall Street and failing to protect small investors from predatorial market practices.
Many in the retail community say SEC commissioners should be voted in, not appointed by the U.S. President.
Market News Published Daily
Market News Today – Wall Street Gets Ready to Sue SEC if Proposals Pass.
For stock market, business news and updates,join the newsletterto receive weekly market news and notifications straight to your inbox.
Franknez.com is the media site that keeps retail investors informed.
In this article, we’re going to go over some of the latest developments in AMC, it’s history since redditors took over, and an AMC short squeeze update for the year of 2023.
AMC keeps on keeping on, and although AMC has been on discount recently, retail investors continue to buy and hold it.
Retail investors remain excited about the data that has been collected for years now.
Will we see an AMC short squeeze while we continue to ride today’s bear market?
And if so, how soon?
Welcome to Franknez.com – the blog providing you with content on stocks, crypto, and market news. Today we’re discussing AMC Entertainment stock and its short squeeze update and history.
Lets get started!
How soon will we see an AMC short squeeze?
Retail investors all want to know.
Is it this week?
Will it be next week?
Or, are we looking at a longer game here?
Here’s what we know.
Key Highlights
AMC closed at $4.55 on March 27th. The stock continues to be heavily shorted. AMC Entertainment is set up for a short squeeze despite its split.
Shareholders continue to buy and hold the stock.
AMC’s short interest data shows us the stock has the perfect setup for a short squeeze.
Below is a series of documented facts and positive news that all influence AMC’s potential towards a short squeeze.
“Since reopening our first theatres with AMC Safe & Clean in August, AMC has welcomed back nearly 10 million moviegoers nationwide without a single reported case of COVID-19 transmission among moviegoers at our theatres. We look forward to welcoming back our New York City guests to the big seats, big sounds and big screens that are only possible at a movie theatre.”
Adam aron, President and CEO of AMC Entertainment
For those who thought AMC was a dead company, think again.
The company is now generating big revenue since it’s reopening and has beat every quarter since 2021.
Positive News for AMC Entertainment (Archive 2021)
Adam Aron gives positive news on AMC Entertainment – Archive 2021
AMC Entertainment has raised more than 2.2 billion dollars in cash
90% of AMC theaters in the United States are now open with New York and Los Angeles finally reopening
Vaccinations and policies are making movie theaters safe
New movie titles are guaranteed to increase sales revenues
CEO and President Adam Aron expresses an optimistic future for AMC Entertainment
AMC Entertainment has implemented a Safe & Clean program under the advisement from Harvard University’s prestigious School of Public health as well as well as the No. 1 U.S. cleaning brand, The Clorox Company. This means movie goers can now return at ease knowing a proper sanitation program has been put in place.
Hedge fund affiliate partners such as MarketWatch, The Fool, and other finance website have been trying to redirect the public from investing in this stock.
That’s primarily because hedge funds are losing millions by the day.
A short squeeze could even put them out of business.
This is why it’s important and always has been for me to spread any positive news surrounding AMC.
I don’t believe in the manipulation of the media and I will continue to update these articles as more great news unfolds.
Experts, analysts, and shareholders can’t identify an exact date and time.
However, the possibility of an AMC short squeeze is certainly possible given that it is still a very heavily shorted stock.
We also now have more data then ever before that indicate a massive short squeeze is almost certain to happen.
Especially now that the SEC has announced some crackdown on shorting.
With Melvin Capital and other hedge funds out of the picture, it’s only a matter of time before others close their positions.
It’s tendie time!
Analyst AMC predictions 2021
With that being said, Trey’s Trades predicted a short squeeze in 2021. Trey has been a leader in the AMC community, though he’s recently taken time off from stock content on YouTube.
Data points towards AMC stock reaching $1000+ per share.
See what Trey had to say.
AMC short squeeze – AMC Stock Forecast – AMC Stocktwits
The real question is, how can retail investors make this AMC short squeeze happen?
We know that short-sellers eventually have to close their positions. This means that they will eventually have to buy AMC stock at the current share price.
If retail investors continue to drive the share price up by buying the dip and holding their positions, short-sellers will have no other option than to buy from the retail investor at a higher share price.
2. Retail investors will also need to buy the climbs in order to show a demand for the stock. This doesn’t have to be huge buys, rather incremental to validate the current share price.
This play essentially creates a supply and demand scenario between retail investors and short-sellers.
The results? A short squeeze.
Just make sure to take your profits.
The last thing you want is to see your gains turn into losses.
Hedge funds are doing everything they can to prevent a short squeeze
How are they doing this?
By promoting false information online (we’re certain you’ve seen it)
Through strategies such as short-ladder attacks in the market
And, by restricting certain brokerage accounts from allowing its retail investors to purchase or buy shorted stocks (Robing hood)
This is what retail investors can do to fight corruption:
Share content that presents facts (blog posts, analysis videos, etc.)
Continue to educate yourself and make investment decisions based on your personal analysis
We’ll begin to see a trend similar to that of GME (Gamestop). AMC will enter a bullish territory before hitting an ‘abnormal’ peak in which AMC would have ‘squoze’.
If an AMC short squeeze doesn’t occur, AMC stock price will still go up allowing shareholders to make at least some sort of profit.
That is, for those whose majority of shares were purchased at today’s current lows.
With AMC theaters now open, it’s inevitable that the company will begin to see bigger sales revenue every time a new title is released.
Keep in mind that AMC’s share price during the booming party economy of 16′ was roughly around $30 per share.
If a short squeeze doesn’t happen, fundamentals will continue to bring the stock up as more investors are buying the stock.
However, a short squeeze not happening is very unlikely as AMC is currently still one of the most heavily shorted stock in the market and most held stock, beating both Apple (AAPL) and Tesla (TSLA), via. NASDAQ.
Majority of the float is also held by retail investors, so the company has a huge support.
AMC hasn’t squeezed yet primarily to two main reasons.
The stock requires volume to drive the stock price action up
Shorts need to close their positions
Volume will surge as more and more retail investors (as well as institutions) get in on AMC stock.
Regarding shorts closing, retail investors need to squeeze them out of their positions by holding their positions and helping increase AMC’s short borrow fee.
You can keep tabs on AMC’s short borrow fee as it changes every day via. Ortex, or Fintel.
In 2021, Wanda Group had caused a little bit of disruption for retail investors by profiting on the first sight of gains.
This turmoil was only short-term but is a reason why we’ve seen some selloff in the market a few weeks ago.
However, Adam Aron has brought awareness in an interview with Trey’s Trades that this selloff from Wanda is simply policy from China.
Despite going around the breaking partnership, Wanda cashed out completely two years ago, making retail investors the biggest stakeholder in the company.
Is AMC Ever Going to Squeeze?
All the numbers point towards the right direction for a massive short squeeze.
Shorts and hedge funds continue to lose money every day.
Interactive Brokers Chief Strategist Steve Sosnick says there’s big demand to short AMC Entertainment (NYSE:AMC) stock.
He says the biggest reason aside from the company’s fundamentals is its new merge with its equity (NYSE:APE).
“It’s very hard to keep the momentum in these things because economic reality does take hold.
Bed Bath & Beyond, at one point was the best performing stock on the board until reality set in and they began defaulting, averted bankruptcy, but using a deal that is so dilutive that it’s unavoidable.”
Sosnick says AMC is in a very special situation because of the proposal to merge APE with AMC common shares.
“Right now we’re seeing such a demand to short AMC partly because of its difficulties but partly because of the special situation.
This really is what they were looking for in some ways as the mother of all short squeezes.
The borrow rate, it costs you 700% to borrow the shares overnight — if you can find them,” said the Interactive Brokers Chief Strategist on Yahoo Finance.
Is AMC Entertainment stock about to squeeze this year?
“Redditors, thank you so much for helping create the best pipeline we’ve ever had”, said Ken Griffin on Business Insider.
Ken Griffin, on how the GameStop frenzy helped raise Citadel’s profile with potential hires.
Business Insider says the SEC found no truth to any of the conspiracy theories but how can the SEC really go against one of the most powerful hedge funds in the world?
Transcripts showed Citadel and Robinhood did in fact have “blunt negotiations” the night prior to the halts.
A Miami district court judge admitted the Citadel and Robinhood transcripts were suspicious.
However, the federal court has dismissed the case due to a ‘lack of evidence’.
Let us know in the comments section below what an AMC short squeeze would mean for you!
If you’re an AMC shareholder let us know in the comment section below.
Support Your Favorite Blog for Only $1/mo.
Your support helps maintain all the costs it takes to run a blog at this scale.
Together, we’ve been able to place AMC Entertainment articles on the #1 page results on Google and get featured on the ‘news’ section, combating mainstream media.
The mission of this platform is to spread the truth corporate media isn’t willing to, by giving the people in our community a voice.
Market News Daily: Citadel’s Ken Griffin warns of recession in America.
Citadel’s Ken Griffin warns of a recession in America, though many would be quick to state the nation is already in one.
Bank of America and Wells Fargo were one of the first to warn people in Q4 of last year.
Ken Griffin’s hedge fund Citadel was amongst the very few who turned in profits last year when majority of the industry lost $208 Billion for clients.
This marked the biggest single-year decline since 2008, when they lost $565 billion, LCH data showed.
Citadel’s gain of $16 billion last year was the largest annual gain ever made by a hedge fund manager, LCH said.
Retail investors grow weary of the hedge funds gains, comparing Ken Griffin to Bernie Madoff, who also never posted losses despite the industry crashing.
“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,” says ex-Citadel Data Scientist Patrick McConlogue.
But Ken Griffin says he sees a setup for a US recession primarily due to people’s savings accounts being tarnished.
Here’s what the Citadel CEO had to say.
Ken Griffin Sees Setup for a US Recession
Market News Daily: Citadel’s Ken Griffin warns of recession in America.
(Bloomberg) Ken Griffin said the setup for a US recession is unfolding, with the Federal Reserve needing to raise interest rates further after Americans were stung with “traumatic” levels of inflation.
The founder of Citadel and Citadel Securities said the Fed is limited in how much it can fight inflation with interest-rate increases, likening the tool to “having surgery with a dull knife.”
“We have the setup for a recession unfolding,” he said in an interview with Bloomberg in Palm Beach, Florida.
Ken Griffin said he would advise Powell to say “less” on inflation.
“Every time they take the foot off the brake, or the market perceives they’re taking their foot off the brake, and the job’s not done, they make their work even harder.”
Ken predicted in 2020 that US markets would struggle with rampant inflation.
He said his firm is not far away from current market consensus on price growth.
“Americans are burning through their pandemic savings, and soaring interest rates are threatening the housing market and other parts of the economy.
That’s a recipe for a downturn, Ken Griffin told Bloomberg.”
Market News Today – ‘We The Investors’ Challenges Wall Street on New SEC Proposals
‘We The Investors’ is taking Wall Street head on which means retail investors from around the world are now being represented in a way like never before for the first time in history.
More than 1,300 letters have been submitted to the SEC supporting rules proposed in December that represent the biggest changes to equities trading in nearly two decades, according to Reuters.
The collective of retail investors have joined ‘We The Investors’ led by Dave Lauer in efforts to combat Wall Street as a legitimate organization that sprouted from the events of the ‘meme stock’ frenzy in 2021.
Halts in AMC, GameStop, and other stocks during at the time angered many investors which led to the exposure of crime and market injustices on social media.
Retail investors have been pushing for market transparency ever since.
We The Investors has held two online meetings since December with SEC Chair Gary Gensler, who took questions directly from retail investors on the proposals, which include requiring most retail stock orders to be sent to auctions to boost competition.
Other proposed rules call for a new standard for brokers to demonstrate they’ve gotten the best execution for clients on transactions, as well as lower trading increments and access fees on exchanges, and stronger disclosure around retail order executions.
But Wall Street, including Ken Griffin’s Citadel is pushing back.
Wall Street, Citadel, Face Organized Retail Investors
The New York Stock Exchange teamed up with retail broker Charles Schwab Corp and market maker Citadel Securities on Monday to ask the U.S. Securities and Exchange Commission to withdraw two recently proposed rules aimed at revamping how stocks trade.
The move represents a coordinated industry push back against what are potentially the most impactful proposals in the SEC’s biggest attempt to reform stock market rules in nearly 20 years.
“We are deeply concerned that the Commission has simultaneously issued multiple far-reaching proposals that would dramatically overhaul current market structure without adequately assessing the cumulative impact on the market or the potential for unintended consequences,” the companies said in an SEC comment letter.
The SEC in December proposed requiring nearly all retail stock orders to be sent to auctions, as well as a new standard for brokers to show they get the best possible executions for their clients’ orders.
Market News Today – ‘We The Investors’ Challenges Wall Street on New SEC Proposals
The SEC also proposed lower trading increments and access fees on exchanges, and more robust retail order execution disclosures.
And now Citadel, Charles Schwab, and the New York Stock Exchange are fighting against these proposals that will help level the playing field for retail investors.
Payment for order flow has annihilated competition and reserved market maker Citadel Securities the right to buy retail orders from brokers such as Robinhood and TD Ameritrade.
During an interview with SEC Chairman Gary Gensler, the Chairman tells ‘We The Investors‘ that he believes the SEC should have the ‘Best Execution Rule‘, not the self-regulatory organization, FINRA.
We The Investors and SEC Chair Gary Gensler Discuss Equity Market Structure Reforms https://t.co/qNUkiDU4cf
Market News Daily: Wall Street Pushes Back Against SEC Stock Market Reforms 2023.
(Reuters) The New York Stock Exchange teamed up with retail broker Charles Schwab Corp and market maker Citadel Securities on Monday to ask the U.S. Securities and Exchange Commission to withdraw two recently proposed rules aimed at revamping how stocks trade.
The move represents a coordinated industry push back against what are potentially the most impactful proposals in the SEC’s biggest attempt to reform stock market rules in nearly 20 years.
“We are deeply concerned that the Commission has simultaneously issued multiple far-reaching proposals that would dramatically overhaul current market structure without adequately assessing the cumulative impact on the market or the potential for unintended consequences,” the companies said in an SEC comment letter.
The SEC in December proposed requiring nearly all retail stock orders to be sent to auctions, as well as a new standard for brokers to show they get the best possible executions for their clients’ orders.
The SEC also proposed lower trading increments and access fees on exchanges, and more robust retail order execution disclosures.
And now Citadel, Charles Schwab, and the New York Stock Exchange are fighting against these proposals that will help level the playing field for retail investors.
Payment for order flow has annihilated competition and reserved market maker Citadel Securities the right to buy retail orders from brokers such as Robinhood and TD Ameritrade.
During an interview with SEC Chairman Gary Gensler, the Chairman tells ‘We The Investors‘ that he believes the SEC should have the ‘Best Execution Rule‘, not the self-regulatory organization, FINRA.
Citadel Said in 2004 PFOF Should Be Banned
New York Stock Exchange News | Citadel SEC News Today.
Citadel pushed back on the possibility of a payment for order flow (PFOF) ban in June of 2022.
Gary Gensler said there may be a conflict of interest for brokers and that too much power is concentrated in a handful of market makers.
The SEC Chairman plans to reroute retail investors into an automated system that would provide a deep pool of liquidity.
The aim of the proposed rules is to improve market quality and efficiency, by boosting competition for retail stock orders and reducing unnecessary intermediation, SEC Chair Gary Gensler has said.
However, the NYSE, along with Schwab and Citadel Securities, asked the SEC to indefinitely withdraw the auction and best execution proposals, saying they could lead to less market liquidity and create confusing regulatory overlap.
“We believe that this more targeted approach will result in significant benefits for U.S. equity market participants, while meaningfully reducing the risk of negative outcomes for markets and investors, including the risk of firms retreating from being liquidity providers – which would be particularly detrimental to retail investors,” they said.
Market News | Mullen Automotive Stock News: Big short sellers own a big stake of MULN stock.
Mullen Automotive (NASDAQ:MULN) is owned by Wall Street’s biggest short sellers.
How will the company fare against predatorial short selling?
Shares of the automaker fell throughout February after the company’s stock rose and consolidated in January.
Signs have led retail investors to believe that Mullen Automotive has become a target to naked short selling; an illegal practice of short selling shares that have not been affirmatively determined to exist.
Momentum began to build in early January as volume in the stock increased heavily.
One case study showed that 7 analysts predicted Mullen Automotive shares to rise by more than 7,000% this year.
MULN stock, according to analysts, is expected to reach between $23-$24 in 2023.
But despite strong news propelling the company forward, Mullen’s shares have continued to tank.
The stock is currently down -33% this year-to-date and more than -47% in the past trading month.
Market News Today: Citadel said payment for order flow creates conflicts of interest.
Citadel pushed back on the possibility of a payment for order flow (PFOF) ban in June of 2022.
But Citadel said in 2004 that payment for order flow “creates conflicts of interest and should be banned”, according to an SEC file.
Gary Gensler said there may be a conflict of interest for brokers and that too much power is concentrated in a handful of market makers.
The SEC Chairman plans to reroute retail investors into an automated system that would provide a deep pool of liquidity.
“Citadel Group urges the Commission to ban payment for order flow. This practice distorts order routing decisions, is anti-competitive, and creates an obvious and substantial conflict of interest between broker-dealers and their customers.
Citadel against payment for order flow 2004.
Broker dealers accepting payment for order flow have a strong incentive to route orders based on the amount of order flow payments, which benefit these broker-dealers, rather than on the basis of execution quality, which benefits their customers.”
These statements come directly from Citadel in the filing.
After the GameStop and AMC incidents in 2021, retail investors urged the SEC to ban payment for order flow after discovering Robinhood reroutes retail orders to short-seller Citadel.
“Redditors, thank you so much for helping create the best pipeline we’ve ever had”, said Ken Griffin on Business Insider.
Citadel and Industry Push Back
A spokesperson for Citadel Securities released the following statement to CNBC:
“It is important to recognize that the current market structure has resulted in tighter spreads, greater transparency, and meaningfully reduced costs for retail investors. We look forward to reviewing the proposals and working with the SEC and the industry towards our longstanding objective of further improving competition and transparency.”
“You need to be very deliberate on that approach,” Ken Bentsen, president and CEO of the Securities Industry and Financial Markets Association (SIFMA) said.
“We have been calling for a review of market structure for some time, but let’s be careful not to try to fix things that may not be broken,” he said. “The retail investor is getting a better deal than they ever have.”
It looks like a lot has changed since 2004.
Citadel was able to identify how advantageous PFOF was and ultimately decided to weaponize it themselves.
Should the SEC ban PFOF?
What are your thoughts on Citadel’s statements versus where the company stands today with the practice?
