The latest report issued by Stocksera shows July saw a massive spike in AMC FTDs amounting to more than $60,000,000.
On Tuesday, July 11th, AMC fails-to-deliver hit a record high of $60,019,141, or approximately 14,155,458 total FTDs that day.
While July’s full report is still updating, we can see that the month carried out an average of 12 million AMC FTDs per 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.
“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 is something Wes Christian says is a worldwide problem.
Once a ticker has remained on the NYSE Threshold Securities List for 13 consecutive days, the broker-dealer must immediately close out all fail-to-deliver positions by purchasing shares in the open market.
However, AMC has not seen any type of major price action in the market that would indicate FTDs have been purchased nor has it been delisted from the threshold list.
Is There Naked Shorting in AMC?
Failure-to-delivers can occur in options trading or when selling short naked, according to Investopedia.
“If a hedge fund releases a short report on a stock, they can short it, but they have to pay a borrowing fee.
They have to borrow it from somebody so they don’t engage in naked short selling, which increases the amount of shares and the float of the company.
Now market makers like those at the New York Stock Exchange– Citadel is one. They can engage in naked short selling, and it’s perfectly legal. It’s part of their market-making duties to provide liquidity for a stock,” reports Blikre.
All signs point towards naked shorting in AMC Entertainment stock; however, AMC CEO Adam Aron seems to differ.
The CEO has stated in the past that he’s seen no evidence whatsoever of manipulation or ‘synthetic shares’ in the market.
Adam Aron announced in April 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, though no update was ever given to shareholders since.
Ironically, AMC’s Hycroft recently opened an investigation with reason to believe that the company has been targeted by illegal short selling which has also led investors to believe that AMC could possibly be working on something behind-the-scenes.
“Based on the findings of ShareIntel’s analysis to date, we are deeply concerned that Hycroft may have been the target of a market manipulation scheme involving illegal short selling,” the report said.
But I’m curious to know your thoughts — leave a comment down below.
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