A new reddit petition is now urging the SEC to end financial manipulation within our markets, which have tampered with the suppression of GameStop’s share price.
In recent years, retail investors have become a powerful force in the financial markets, leveraging social media platforms like Reddit and X, formerly Twitter, to organize, educate, and challenge the status quo of Wall Street.
A growing movement, fueled by frustration over perceived market manipulation, has placed the U.S. Securities and Exchange Commission (SEC) under intense scrutiny.
At the heart of this movement is a petition initiated on Change.org, amplified by Reddit communities such as r/DeepFuckingValue, calling for the SEC to address predatory practices like naked short selling, spoofing, dark pool trading, and high-frequency trading (HFT).
These practices, retail investors argue, have been used by hedge funds and market makers to suppress the stock prices of companies like GameStop (GME), AMC Entertainment (AMC), and other so-called “meme stocks.”
The Spark: Reddit and the Petition
The petition, titled “End Financial Manipulation: Demand Transparency on Phantom Shares, FTDs & Naked Shorts,” was launched on Change.org and has garnered significant attention, particularly within Reddit communities like r/DeepFuckingValue, r/Superstonk, and r/GME.
The thread, which has received nearly two hundred upvotes and comments, serves as a rallying cry for those who believe the financial system is rigged against the average investor.
The petition itself is addressed to the SEC, members of the DOJ, and FINRA, demanding immediate action to investigate and regulate practices that create “phantom shares” and undermine market fairness.
It specifically calls for:
- Transparency on fails-to-deliver (FTDs), naked short selling, and dark pool trading.
- Stricter penalties for market manipulators who exploit regulatory loopholes.
- An investigation into the unusual trading activities affecting stocks like GameStop and AMC.
- Reform of outdated rules to adapt to modern trading technologies and practices.
The petition argues that these manipulative tactics, often employed by hedge funds and market makers, have caused billions of dollars in losses for retail investors while protecting the interests of Wall Street elites.
“Through unchecked practices like Fails to Deliver (FTDs), phantom shares, dark pool abuse, naked short selling, and hidden leverage instruments like Total Return Swaps (TRS) and Credit Default Swaps (CDS), powerful market participants have systematically eroded transparency and accountability across U.S. and global markets.
These manipulations suppress legitimate price discovery, distort public companies’ valuations, damage retirement savings, and undermine trust in a system that should serve all, not just a privileged few.
Left unchecked, these abuses create an uneven playing field that favors insiders and disadvantages ordinary investors, workers, and small businesses.
Notably, the unchecked influence of short-sellers — including public figures who profited by intentionally depressing valuations — has compounded the harm.
Public trust was further shaken by coordinated negative campaigns, leaving many questioning whether markets truly reward merit or merely power and deception.”
Reddit users have been instrumental in spreading the petition, using platforms like r/DeepFuckingValue to share links, discuss strategies, and encourage collective action.
This grassroots movement echoes the sentiment of the 2021 GameStop and AMC short squeeze, where retail investors, coordinated via Reddit’s r/wallstreetbets and other forums, challenged hedge funds betting against struggling companies.
Predatory Practices in the Spotlight
Retail investors, often referred to as “apes” in Reddit communities, have long accused hedge funds, market makers, and other institutional players of using sophisticated tactics to manipulate stock prices.
The petition and related Reddit discussions focus on four key practices: naked short selling, spoofing, dark pool trading, and high-frequency trading.
These methods, have been used to suppress the stock prices of companies like GameStop, AMC, NWBO, MULN, GNS, and many more, preventing them from reflecting their true market value.
Naked Short Selling and Phantom Shares
Naked short selling involves selling shares that the seller does not own and has not borrowed, effectively creating “phantom shares” that dilute a company’s stock price.
While naked short selling has been illegal in the U.S. since 2008, retail investors argue that loopholes and lax enforcement allow it to persist.
Investors have educated the masses on how naked shorting creates artificial supply, driving down stock prices and harming companies and their shareholders.
For example, during the 2021 GameStop saga, short interest reportedly exceeded 140% of the company’s float, suggesting the presence of phantom shares.
Reddit users on r/Superstonk and r/GME have pointed to fails-to-deliver (FTDs) as evidence of naked shorting.
FTDs occur when shares are not delivered to a buyer by the settlement deadline, often linked to naked short selling or settlement issues.
In 2021, GameStop FTDs spiked into the millions, with SEC data showing $359 million in undelivered shares.
Retail investors argue that these FTDs, combined with high short interest, indicate systemic manipulation designed to suppress stock prices and protect short sellers.
Spoofing
Spoofing is a form of market manipulation where traders place large buy or sell orders with no intention of executing them, creating a false impression of market demand or supply.
This tactic can influence stock prices by tricking other investors into buying or selling.
Social media users, such as @lasvegas_ape on X, have called spoofing a “common practice” on Wall Street, accusing the SEC of ignoring it.
In the context of GameStop and AMC, retail investors assert that spoofing has been used to create artificial downward pressure on stock prices, discouraging bullish momentum.
Dark Pool Trading
Dark pools are private exchanges where large investors trade shares away from public markets, often to avoid impacting stock prices.
However, retail investors argue that dark pools are used to hide manipulative trading activity, such as short selling or off-exchange trades that suppress stock prices.
A post on X by @_ShowMeTheCash_ claimed that 86% of AMC trading occurs off-exchange, limiting price discovery and enabling fraud.
Analytical data shows that for many years AMC’s off exchange trading did exceed more than 50% per day.
The petition demands greater transparency in dark pool activity, arguing that it undermines the integrity of public markets.
High-Frequency Trading (HFT)
High-frequency trading involves using algorithms to execute thousands of trades per second, often exploiting tiny price discrepancies.
While HFT is legal, retail investors argue that it gives institutional players an unfair advantage, allowing them to front-run retail orders or manipulate prices.
In the case of AMC, a Reddit user on r/Superstonk described how hedge funds used HFT to create “walls” at key price levels, preventing the stock from breaking out.
The petition calls for stricter oversight of HFT to level the playing field for retail investors.
The GameStop and AMC Connection
The allegations of market manipulation are deeply tied to the 2021 GameStop short squeeze, a pivotal event that brought retail investors into the spotlight.
In January 2021, users on Reddit’s r/wallstreetbets noticed that hedge funds, such as Melvin Capital, had taken massive short positions against GameStop, betting that its stock price would fall.
Coordinated buying by retail investors drove the stock price from $17.25 to over $500 pre-market, forcing short sellers to cover their positions at a loss.
AMC, BlackBerry, and Nokia also saw significant price surges at the time as retail investors targeted heavily shorted stocks.
The short squeeze exposed vulnerabilities in the financial system, particularly the role of naked short selling and phantom shares.
Retail investors argued that short interest exceeding 100% of a company’s float was only possible through illegal practices.
The event also sparked controversy and outrage when brokerages like Robinhood restricted buying of GameStop and AMC shares, citing collateral requirements from clearinghouses like the DTCC.
Retail investors viewed these restrictions as evidence of market manipulation, accusing brokerages of protecting hedge funds at the expense of retail traders.
Multiple class-action lawsuits were filed against Robinhood, and the U.S. House Committee on Financial Services held hearings to investigate.
The petition and Reddit discussions draw heavily on the GameStop saga, citing it as a case study of systemic manipulation.
Retail investors argue that the SEC’s failure to act decisively in 2021 allowed predatory practices to continue, prompting the current push for reform.
Retail Investors vs. Wall Street: A David-and-Goliath Battle
The petition and Reddit movement reflect a broader sentiment among retail investors: that the financial system is rigged to favor Wall Street insiders.
Hedge funds and market makers, such as Citadel Securities, are often criticized.
In 2020, Citadel was fined $180,000 by FINRA for failing to mark 6.5 million trades as short sales, a violation of Regulation SHO.
Retail investors argue that such fines are mere “slaps on the wrist,” insufficient to deter illegal behavior.
And in 2023, the SEC charged Citadel $7 for marking short sales as long and vice versa for a period of 5 years.
A Reddit user on r/stocks described a $7 million fine against Citadel as “like a couple bucks” for a firm with $62 billion in revenue.
Retail investors also accuse the SEC of complicity, claiming it prioritizes protecting institutional players over retail traders.
Posts on X, such as one by @TickellJeff, criticize the SEC for ignoring years of reports about naked shorting and dark pool abuse.
The petition echoes this sentiment, arguing that the SEC’s inaction has eroded investor trust in market fairness.
To combat these perceived injustices, retail investors have adopted a strategy of collective action.
Reddit communities like r/Superstonk and r/GME encourage users to “buy and hold” stocks like GameStop, believing that sustained buying pressure can force short sellers to cover their positions.
The return of Keith Gill, known as “Roaring Kitty,” in May 2024, further galvanized the movement, momentarily driving GameStop’s stock price at the time.
The SEC’s Response and Regulatory Challenges
The SEC has faced mounting pressure to address market manipulation since the 2021 GameStop saga.
In February 2021, acting SEC Chair Allison Herren Lee announced that the agency was investigating potential wrongdoing, focusing on broker-dealer conduct and market manipulation.
The SEC also implemented Rule 13f-2 in 2023, requiring large investment firms to report short positions and trading activities to increase transparency.
However, retail investors argue that these measures fall short, as FTDs and dark pool trading continue to raise concerns.
One challenge for the SEC is proving market manipulation.
John Reed Stark, a former SEC enforcement chief, noted that coordinated buying by Reddit users does not necessarily constitute fraud, as it lacks the intent to deceive.
Similarly, proving naked short selling requires detailed trading data, which unfortunately is often incomplete or delayed.
The SEC’s failure to implement a consolidated audit trail (CAT) since the 2010 Flash Crash has hindered its ability to track illegal trading activities.
Related: SEC Commissioner laments agency’s decision to fight against CAT system
Broader Implications
The Reddit-driven petition and the broader retail investor movement have significant implications for the financial industry.
First, they highlight the growing influence of social media in shaping market dynamics.
Platforms like Reddit and X have empowered retail investors to challenge institutional dominance, raising questions about market democratization.
Second, the movement underscores the need for regulatory reform.
The petition’s demands for transparency and stricter penalties.
Proposals like banning short selling or regulating dark pools could reshape the financial landscape, though they face resistance from Wall Street.
Finally, the movement reflects a cultural shift in how retail investors perceive their role in the markets.
No longer content to be passive participants, they are demanding a seat at the table, using collective action to hold regulators and institutions accountable.
Also Read: Citadel Securities Now Warns SEC of Dark Pools and Risks, What?
Why This Matters
The SEC is under fire, and Reddit users are at the forefront again of a movement to end financial manipulation.
The Change.org petition, amplified by communities like r/DeepFuckingValue, represents a culmination of years of frustration over naked short selling, spoofing, dark pool trading, and high-frequency trading.
By targeting predatory practices that suppress stock prices, retail investors are challenging the power structures of Wall Street and demanding a fairer market.
While the SEC has taken steps to address these concerns, retail investors remain skeptical, viewing the agency as complicit in protecting institutional interests.
As the petition gains traction and Reddit continues to mobilize, the battle between retail investors and Wall Street is far from over.
Whether this movement will lead to meaningful reform remains to be seen, but its impact on the financial world is undeniable.
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Also Read: Investors now urge President Trump to investigate naked short selling in formal letter
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