Elon Musk, one of the most influential people and geniuses of our time is speaking out on hedge funds and the SEC.
The Tesla and SpaceX CEO exchanged emails with CNBC on this exclusive take and shares his thoughts on short sellers and regulators alike.
And according to CNBC the SEC declined to comment.
Welcome to Franknez.com – today’s market news is significant because we have a high-profile influencer speaking out against injustices in the stock market. I’m going to go over big key points from the report.
Let’s dive right into it!
Join the newsletter to receive weekly market news and stock and crypto updates.
Elon Musk on hedge funds and short sellers
In this CNBC exclusive, Elon Musk says hedge funds have used short selling and complex derivatives to take advantage of retail investors.
Something retail investors who purchased so called ‘meme stocks’ last year found out very easily.
The retail community known as ‘apes’ have been standing up to the injustices brought forth by hedge funds.
Predatorial tactics have suppressed the share prices of AMC and GameStop to further refrain retail from squeezing short sellers from their positions.
The complex derivatives Elon is referring to could be an array of things such as options trading, HFT, swaps, borrowed stock, and even naked shares.
Which in retrospect are all predatorial tactics hedge funds and short sellers use to profit from falling stock prices even when the inflow is largely greater than the outflow.
Tesla CEO speaks out on publicity campaigns that drive stock prices to the ground
The Tesla CEO says hedge funds will short a company, conduct negative publicity campaigns to drive the stock price down, then cash out and do it multiple times over.
This tactic is what’s known as “short and distort”.
Hedge funds impose their influence on corporate media such as The Fool, Wall Street Journal, and MarketWatch to scare people out of their money.
One of the biggest fear mongers has been The Fool.
They abused their reach to derail curious investors from investing in AMC Entertainment and GameStop stock.
AMC Entertainment was up more than 3,000% at one point and mainstream media caused many investors to miss the opportunity.
And for others, to get in late, resulting in several losses.
The conflict of interest derives from the connection between the hedge fund Citadel and News titan, News Corp.
News Corp owns the Wall Street Journal, DowJones Newswire, MarketWatch, and Barrons.
These are all companies that have put out hit publications attacking AMC and referred to a specific group of activists as ‘conspiracy theorists’.
On the contrary, the retail community is religious about facts and evidence.
Dark pools and naked shorting are only two of many injustices retail investors have brought to light.
The SEC Commissioner confirmed on a Bloomberg exclusive that 90%-95% of retail market orders are not processed through the lit exchange.
Elon on the SEC and regulators
Elon Musk has never been too fond of the SEC.
In 2018 he referred to the agency as the “Shortseller Encrichment Commission”.
In 2020 he posted this statement on Twitter about the SEC.
The CEO made another anti-SEC post on Twitter again after the interview with CNBC.
And retail investors are cheering him on for being a voice against corruption in the market.
The SEC has been held accountable as being implicit to hedge fund market manipulation.
They’ve imposed “fees” that have allowed hedge funds to continue their predatorial strategies.
There has been no serious consequence or justice protecting retail investor.
The agency has also failed to recognize the manipulation in both AMC and GameStop in a report released in December of 2021.
Most retail investors do not trust the SEC according to a poll conducted by community member on Twitter.
The poll below shows that out of 10,511 votes, 97.3% of investors do not trust the agency.
Why are hedge funds being investigated?
Hedge funds are being investigated for flooding the market with fake orders to drive stock prices down, a term known as “spoofing”.
Muddy Waters was recently raided by the FBI for using this predatorial tactic.
Citadel is being investigated too according to a Bloomberg report.
The Department of Justice is involved.
They are targeting several hedge funds and banks in relations to market fraud and manipulation.
Banks involved in the investigations so far are Morgan Stanley and Goldman Sachs.
Bank of America is one of the top 10 financial institutions shorting AMC Entertainment stock.
The bank has yet to be announced in the probe.
Elon Musk told CNBC he’s glad to see the Justice Department is investigating short sellers.
“This is something the SEC should have done, but, curiously, did not.” stated Elon.
He spoke out against short sellers in 2021 during the “meme stock” frenzy.
This was during the time when retail began buying heavily shorted stocks en masse.
Opinion: We need more activists like Musk
The retail community has done an incredible job at raising awareness of injustices in the market.
The ‘ape’ community without a doubt made today’s progress possible.
Now, retail investors continue to demand regulators to lift short selling suppression imposed on stocks such as AMC and GameStop.
We need more public figures to speak out on the matter.
Would you agree?
Leave a comment below with your thoughts.