BREAKING: The SEC is charging TradeZero America and co-founder with deceiving customers about ‘meme stock’ trading halts.
“The Securities Exchange Commission today charged broker-dealer TradeZero America Inc., and its co-founder Daniel Pipitone, with falsely stating to the firm’s customers that they didn’t restrict the customers’ purchases of meme stocks when in fact they did.”
The SEC does not mention in the press release which three ‘meme stocks’ customers were not allowed to buy.
I’ll link the official source below.
Let’s discuss it.
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TradeZero America deceives customers about meme stock halting
In late January of 2021, many broker firms halted the purchase of ‘meme stocks’.
You might have heard of the Citadel and Robinhood scandal, where the two colluded to remove the ‘buy button’.
While the scandal became headlines, the transcripts available weren’t enough to charge the institutions.
The SEC released a press release today stating that TradeZero America is being charged for deceiving its customers.
The firm told its customers they did not halt the purchase of meme stocks when in fact they did.
After the halt, TradeZero and Pipitone made misleading public statements via interviews, social media, and in a press release in an effort to distinguish their company from brokers that restricted trading during that period.
In a Reddit “Ask Me Anything,” Pipitone said, “That some trading firms are blocking these symbols is disgusting, unprecedented… Our clearing firm tried to make us block you and we refused.”
Side note: THIS STATEMENT is disgusting.
TradeZero America received a $100,000 penalty, and co-founder Pipitone received a $25,000 penalty.
Although the SEC did not mention which ‘meme stocks’ were prohibited from being purchased, GameStop and AMC have been the two biggest ‘meme stocks’.
I assume the third was Bed Bath & Beyond.
Source: SEC Press Release
Where are ‘meme stocks’ headed in 2022?
AMC and GameStop continue to be heavily shorted.
While both companies have survived the pandemic and have shown a dramatic fundamental improvement, short sellers have not left.
Both these stocks have an extremely high short interest and shares on loan.
More and more retail investors are piling in these two stocks for a short squeeze play that was merely suppressed last year.
Trading was halted in both AMC and GameStop in late March of 2022.
AMC rose to $34 per share while GME stock rose to $199 per share.
This form of market manipulation continues today.
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