In a recent development that has reignited discussions about accountability in the financial markets, the ringleader of a global securities fraud scheme was sentenced in a U.S. federal court, marking a significant moment in the ongoing battle against financial misconduct.

The case, first reported by Investment Executive, underscores the persistent challenges faced by regulators in curbing illegal activities that harm retail investors, as well as the growing frustration among these investors—particularly those in the GameStop, AMC, and MMTLP communities—who are calling for stricter punishments, including prison time, for perpetrators of securities fraud.

The Case: A Global Scheme and Its Consequences

Last November, Ronald Bauer, a dual Canadian-U.K. citizen residing in London, pleaded guilty to U.S. charges related to a scheme that manipulated the markets for seven stocks.

He has now been sentenced to 20 months in prison, three years of supervised release, and ordered to forfeit US$4.3 million.

U.S. authorities described Bauer’s operation as a “sophisticated scheme” where he secretly controlled the stocks of several companies.

To obscure this control, he distributed shares among various nominees via a Swiss corporation, Blacklight, S.A.

These nominees engaged in match trading and funded promotional efforts aimed at artificially inflating the stocks’ prices before selling their shares at a profit.

“From overseas, Bauer manipulated stock prices to enrich himself at the expense of unsuspecting investors,” said Jay Clayton, U.S. attorney for the Southern District of New York, in a release.

“Today’s sentencing sends a clear message: those who seek to manipulate U.S. markets from outside the United States will face justice,” he added.

Bauer had previously faced sanctions from the U.S. Securities and Exchange Commission (SEC) for involvement in another pump-and-dump scheme.

In 2005, he settled allegations with the SEC without admitting or denying the charges, which included a five-year ban on trading in penny stocks and the requirement to disgorge US$840,000 plus interest.

In this latest case, the SEC filed separate civil charges against Bauer and seven alleged co-conspirators, including several other Canadians, claiming they manipulated the stocks of 17 microcap companies, resulting in US$145 million in illicit trading profits.

This case is just one of many that have drawn scrutiny to the practices of major financial institutions and market participants.

Retail investors, who have become increasingly vocal through social media platforms like X, argue that such cases are emblematic of a broader systemic issue where powerful players—such as JPMorgan, Goldman Sachs, Citadel, and Virtu—engage in or enable manipulative practices like naked short selling, counterfeit shares, and other forms of market manipulation, often with minimal consequences.

The Retail Investor Uprising: GameStop, AMC, and MMTLP

The GameStop (GME), AMC Entertainment (AMC), and MMTLP (Meta Materials Preferred Shares) sagas have become rallying points for retail investors who feel cheated by a financial system they perceive as rigged.

These communities, galvanized by the 2021 GameStop and AMC short squeeze and subsequent market events, have used platforms like X to highlight allegations of fraud, including claims of counterfeit shares in the case of MMTLP and manipulative shorting practices affecting GameStop and AMC.

Posts on X reflect deep-seated frustration, with users like @NsuteraA1 and @JimR65_ raising awareness of the lack of significant action from the Department of Justice (DOJ) and regulators like the Securities and Exchange Commission (SEC) and the Financial Industry Regulatory Authority (FINRA).

For example, the MMTLP case has been particularly contentious.

FINRA’s trading halt and delisting in MMTLP in December 2022 wiped out significant value for approximately 65,000 shareholders, with allegations of counterfeit shares and regulatory inaction fueling retail investor outrage.

Similarly, GameStop and AMC investors have pointed to practices like naked short selling—where shares are sold without being borrowed—and alleged collusion between hedge funds and market makers as mechanisms that suppress stock prices and harm retail investors.

These communities argue that major financial institutions, including Citadel and Virtu, which serve as market makers, and banks like JPMorgan and Goldman Sachs, have either directly participated in or facilitated these activities.

Also Read: Brokerage Firms Are Now Actively Being Investigated in Meta Materials Case

Fines as a “Cost of Doing Business”

One of the central grievances voiced by retail investors is that fines, often in the millions or even billions of dollars, are insufficient deterrents for financial misconduct.

A recent example is Goldman Sachs’ $1.45 million civil fine for failing to accurately report data for 36.6 billion stock market trades, a penalty that critics argue is negligible compared to the firm’s revenue.

Similarly, the SEC’s settlement with 12 alternative investment firms, including private equity giants, for $63 million over recordkeeping violations involving private texting highlights the reliance on monetary penalties rather than criminal accountability.

Retail investors, as seen in posts like one from @mattysf8 on X, view these fines as a mere “cost of doing business” for large institutions.

They argue that such penalties do little to prevent future violations, as firms like JPMorgan, Goldman Sachs, Citadel, and Virtu can easily absorb these costs without facing significant operational or reputational damage.

“10s of billions of fraudulent trades. $1 million fine. Short seller commits fraud while honest household investors get robbed,” @mattysf8 wrote, encapsulating the sentiment that fines allow perpetrators to pay their way out of accountability without addressing the root causes of market manipulation.

Also Read: Retail Investors Now Fire Back At The New SEC Chair

The Call for Prison Time and Systemic Reform

The retail investor communities behind GameStop, AMC, and MMTLP are not just seeking financial restitution—they are demanding harsher punishments, including prison sentences, for those found guilty of securities fraud.

On X, users like @JimR65_ have called for the incarceration of executives at firms like Citadel and Virtu, arguing that only criminal penalties will deter future misconduct.

“It’s time… that we incarcerate them all!” they posted, reflecting a broader sentiment that civil fines are inadequate when retail investors lose life savings due to manipulative practices.

This push for jail time is rooted in the belief that securities fraud, particularly when it involves deliberate manipulation that harms retail investors, is a crime with real victims.

The MMTLP community, for instance, has highlighted the financial devastation faced by thousands of investors, many of whom were small retail traders.

Similarly, GameStop and AMC investors argue that manipulative shorting practices have suppressed stock prices, preventing them from realizing fair market gains during the 2021 meme stock frenzy and beyond.

Retail investors also point to a perceived double standard in the justice system.

While individuals like the ringleader in the recent sentencing face prison time, major institutions and their executives often escape criminal prosecution.

For example, the Bitfinex hacker, who pleaded guilty to money laundering conspiracy, received a five-year prison sentence, and a crypto firm, CLS Global, was fined $428,059 for wash trading.

Yet, large banks and hedge funds rarely see their leadership face similar consequences, even when implicated in significant regulatory violations.

Also Read: Expert Predicts Massive Panic Will Trigger Short Squeeze Across the Market

Regulatory Challenges and the Path Forward

Regulators like the SEC and FINRA face a complex task in addressing these concerns.

The International Organization of Securities Commissions (IOSCO) recently called on tech firms to combat investor fraud by connecting to its global database of unregistered firms and adopting measures to detect and remove scam content.

However, these efforts focus primarily on preventing fraud rather than punishing it after the fact.

Retail investors argue that regulators must go further, advocating for systemic reforms such as:

1. Criminal Prosecutions: Prioritizing criminal charges over civil fines for executives and firms found guilty of securities fraud, particularly when it involves deliberate market manipulation.
2. Transparency in Market Operations: Greater oversight of market makers like Citadel and Virtu to prevent practices like naked short selling and ensure fair trading conditions.
3. Restitution for Victims: Mechanisms to compensate retail investors harmed by fraudulent activities, such as those affected by the MMTLP trading halt.
4. Regulatory Independence: Addressing perceptions of regulatory capture, where agencies like the SEC and FINRA are seen as too lenient on powerful financial institutions.

Also Read: SEC Now Responds to Retail Investors on Illegal Manipulation

A Growing Movement for Accountability

The sentencing of the ringleader in the global securities fraud scheme is a step toward accountability, but for retail investors in the GameStop, AMC, and MMTLP communities, it is not enough.

Their vocal presence on platforms like X has transformed them into a powerful force, demanding not just fines but prison time for those who perpetrate or enable securities fraud.

The financial system will remain broken until regulators impose consequences that match the scale of the harm caused to everyday investors.

The outrage expressed by these communities underscores a broader call for reform in a financial system that many retail investors view as tilted in favor of Wall Street giants.

Whether regulators will heed their demands for harsher punishments and systemic change remains to be seen, but the growing influence of retail investors suggests that their voices will not be silenced anytime soon.

But I’m curious to know what you think — leave your thoughts below or start a discussion in the Retail Investor Forum.

I also want to thank Melanie Hughes for buying me a coffee ☕ down below, I hope you see this 🫶

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Also Read: Hedge Fund Now Freezes Ability For Customers To Withdraw Money

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