Hedge funds have been manipulating the stock market for decades.
But it wasn’t until now that a community has risen to raise awareness of market injustices.
The shorting of both AMC and GameStop stock have uncovered a number of nefarious strategies used against retail investors.
What is the SEC doing to regulate these financial entities?
We’re here to find out.
Welcome to Franknez.com – The blog that fights for retail investors. Today we’re discussing how hedge funds manipulate the stock market and what the SEC is doing about it.
Let’s get started!
Overleveraging Borrowed Shares
Hedge funds have an incredible supply of short shares available to borrow.
This advantage has allowed them to manipulate a stock’s share price by initiating short-ladder attacks.
While supply and demand are pushing a stock’s price up, hedge funds short the stock using an insane amount of leverage.
This predatorial strategy has yet to be announced as illegal nor has it been addressed by the SEC.
Off Exchange Trading
Hedge funds and market makers are getting away with being able to trade and swap stock in foreign exchanges where the stock’s price isn’t required to be disclosed.
They’re taking retail orders and, in a way, manipulating the circulating supply by not reporting accurate transactions.
We’ve seen this happen with Barclays.
Reports by Finra have been made public detailing multiple fines on Barclays for inaccurate books and records.
Barclays is one of Citadel’s clearing houses.
Off exchange trading where transactions aren’t displayed on the list market such as the NYSE is a massive problem the SEC is still trying to figure out.
Though the SEC is trying to implement the D-Limit order that will allow stocks to trade under IEX, they’re having trouble from hedge funds and market makers.
Citadel has sued the SEC on this matter, we have yet to receive a public update on the case.
Related: 95% of Retail Orders Don’t Go Through the Lit Exchange
Naked Shorting
AMC and GameStop have had an incredible amount of FTDs, or failure-to-delivers.
These are orders that have not been executed in options, and are usually a result of a ‘short party’ not owning or not having all of the underlying asset.
This has led retail investors to the educated assessment that synthetic shares are floating in the market; shares known as naked shares used to short a stock.
According to Investopedia, “Despite being made illegal after the 2008–09 financial crisis, naked shorting continues to happen because of loopholes in rules and discrepancies between paper and electronic trading systems.”
Naked shorting has gone mainstream with CNBC’s Melissa Lee and Fox Business’s Charles Payne bringing light to this predatorial practice in the market.
Retail investors must use their voice to address these issues to the SEC.
Related: GTII Pursues Legal Action Against Naked Shorts
The Use of Mainstream Media Outlets
According to The Fool, you should invest in this or that “instead”.
We’ve seen the headlines countless times.
The Motley Fool is a source that provides its subscribers with hand-picked stocks with potential gains.
With tremendous respect, stick to what you do.
The integrity of this company is to help investors pick winning stocks, not to divert them from a stock due to its potential upside that can cause hedge fund partners to lose billions of dollars.
And that’s exactly what happened.
No matter how many times mainstream media outlets tried to divert retail investors from buying AMC stock, it cost hedge funds a lot of money all year.
And at the same time, a lot of retail investors have a lot of unrealized gains.
This ladies and gentlemen is how the media has tried to manipulate the performance of a stock.
This influence can sway a new retail investor from adding to the surging volume of shares being purchased in the market.
To the new retail investor – make your financial decisions based on your own due diligence.
Not on what media sources get paid to write about.
Yahoo Finance & InvestorPlace
Platforms such as Yahoo Finance & InvestorPlace have also had their fair share of negative headlines to try and divert the public from skyrocketing AMC to the moon.
With InvestorPlace even throwing a jab at GME investors saying, “If You’ve Made Money On GameStop, You’re Not An Investing Genius”.
Perhaps not, but I’m pretty certain these investors are wealthier than the person who came up with that punchline.
These media sources have been discouraging new retail investors from investing in AMC since the beginning of the year although the stock is up year-to-date!
Manipulation In the Stock Market
I’m sure you’ve all heard of the Robinhood scandal.
This is another form of manipulation in the stock market caused by the halt of buying power.
Robinhood prevented its users from buying stocks such as AMC and GME (GameStop) during GME’s bull run.
Although restrictions aren’t as tight anymore, we’re beginning to see trusted and beloved companies get exposed as hedge funds worst nightmares become a reality.
Today we’re seeing more people learn about how the stock market moves.
If more of the public is to understand how hedge funds pose a risk to our economy and businesses, we must expose these financial institutions for who they really are.
Read: Why new retail investors investing in AMC should avoid Robinhood
A House of Cards, r/superstonks (Reddit Post)
A Redditor just posted an insane amount of DD on Reddit.
This long form post discusses the transition from paper filled orders in the stock market to the use of computers going tracing back to the mid 80s.
The post reveals the beginning of issuing naked shares.
We’re also learning that a lot of transaction are being held by the actual institutions that are shorting these stocks.
Robinhood routes more than half of it’s customers to Citadel.
This information has now been disclosed via the Washington Post.
You can read the full Reddit post here.
Trey’s Trades does a quick breakdown on this DD as well.
The video is embedded for your viewing pleasure.
It costs retail investors nothing to hold, but it costs shorts and hedge funds money every day.
It’s only a matter of time before a squeeze occurs, no matter how manipulated the stock market gets.
Related: Citadel loses billions: Hedge funds are getting dragged down
Franknez.com fights The Fool, Yahoo Finance, and InvestorPlace
Franknez.com is fighting for the community against malpractice from all news media shunning AMC, GameStop, and other retail favorites.
This platform will serve as a positive media outlet for the community and only spread factual documentation, and news related cited-sources.
I will not encourage retail investors to take a position in any stock.
However, I will outline the facts and evidence to help you make your own personal financial decision.
How can retail investors bring awareness to the community?
Retail investors can expose false information on social media to shine light on manipulation tactics driven by hedge fund partners.
Sharing factual and positive articles relating to the performance or analytics of a particular stock is another way the investing community can stay united.
Franknez.com is a platform for the community.
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About The Author
I want to know what happened to all the ftd
💯💯💯💯
Frank,
Another great article!!! It may be just me but I have a feeling that something is different in the market for AMC and the pendulum is swinging the Apes way!!! I have been buying shares for months now and I get a sense that FOMO is growing and that I may only have a few more days or weeks to purchase shares at a discounted price….I will buy and hold till this thing blows up!!! Keep up the good work my friend!!! You are being heard!!!
To the moon!
Jon
Cheers Jon – Something massive is indeed coming! To the moon brother
Thanks for your commitment to the average American attempting to combat the greed and corruption that’s left so many behind in 2008. You’re doing God’s work!
Hi Juan, I’m only doing my part in the community brother – thanks for commenting
Adding to the Motely Fool slanted articles… You should look into their “investment fund” sister company.
https://www.mfamfunds.com/
Then if you look at their holdings, and check that against when and what they hold… You’ll see a direct correlation. Is THAT not market manipulation?
And since short positions are “self reported”, my gut says they probably have a short position in AMC.
I’d love a bigger brain to look into this.
*EDIT – Look at their holdings and check that against when and what “articles they write”.
A couple of years ago I think Citi had a guidance for the very wealthy clients saying only the rise of the little guy is one of the biggest threads to the “system”. I’ve been trying to find that since it was posted back then in forums. Just fits the current movement
No way. If you find it please email it over and I will include it on this post.
https://www.forbes.com/sites/kenrapoza/2012/04/17/what-rich-people-fear-most/?sh=45446e4f441f
could this be the article Thor mention? Very last sentence.
Willem Buiter, a senior economist at Citi and a former member of the Bank of England’s Monetary Policy Committee, warned in the report that political backlash against the rich and the institutions that support them could strengthen around the world. This is the new normal many investment bank economists are concerned about. Not because they are worried about protests from Chicago to New York, or even worried about inequality. Their concerns are more in tune with their clients, who see governments — even autocratic ones — ultimately bending to popular pressure. In short, they fear the non-rich.
Finally we have an article with the truth. Thank’s
I couldn’t watch in silence
Thank you, for pulling the curtain back on how the deck is being stacked against the ma and pa investor and Main St. USA companies. Both have been plundered using shorting in an unethical manner. Using dark pools to self deal has led to the dislocation of company and shareholder value. The actions you have brought to light make it impossible to make a reasonable assessment of value and undermines the faith and usefulness in/of our financial markets by investors and companies raising capitol.
Thank you for your scoop!
Thank you for your comment – I strongly believe in the power of the people have when we come together for a cause or a change
You’re gaining a huge following. Keep up the great work!
I appreciate every single one of you, you’re the ones making a difference 🙏 – thank you
All of your ads are pointing to Cramer and what stocks to buy in 2021.
Unfortunately those are out of my control – they change from time to time
The news feed we find in our trading app is compromised as well.
Webull has been manually giving the spotlight to the bad headlines and left the good ones out of their app.
“@stonksarelife” pointed that out on twitter couple days ago and it appeared to be true.
Check by yourself!
That’s ill 😕. Manipulation of the media right there. Please share this information with the community. I don’t use Webull but you can email me screenshots to update this post and inform.
There have been certain things that Webull has been doing that reminds me of RH, which I left. I will leave Webull too.
Makes 100% sense. Who do you use now? Vanguard and Ameritrade are very good platforms
Finally a journalist with ethics!!! Who wrote this so they can be given credit?
Thank you brother 🙏 I wanted to give back to the community
Thanks again!
I was hoping you might be able to comment on the SEC report 17 CFR * 240.15c3-3, dated last 10-22-20 but to take effect 4-22-21, Section 1, that “A broker or dealer shall promptly obtain and shall thereafter maintain the physical possession or control of all fully paid securities and excess margins carried by a broker ore dealer carried by the customers.”
This sounds like a great way to curb HF’s from shorting thousands of stocks by being able borrow basically an unlimited amount of cash to manipulate the market.