Ken Griffin now makes surprising claims confirming the illegal manipulation that retail investors have been raising awareness about for years.
“Markets are efficient because of active managers setting the prices of securities,” says Citadel Securities’ Ken Griffin.
This prompts the big question, does supply and demand matter? And is it even real?
For years now, retail investors have alleged that market makers and hedge funds have the full control of where prices go.
Dark pools have allowed institutions to keep a big percentage of retail money from displaying in the lit market.
Naked shorts have allowed institutions to suppress the buying pressure of a stock, driving prices down.
And the media, unfortunately doesn’t report this.
“Firms like Citadel, firms like Fidelity, firms like Viking Global, Capital Research, we’re all running large teams of people that are engaged in fundamental research trying to drive the value of companies towards where we think they should be valued,” says Griffin.
If market makers and hedge funds have the ability to decide what the stock price of a company should be, then this annihilates the market’s integrity when hedge funds such as Citadel have a dark history of market manipulation.
In September, Citadel was charged for illegal short selling violations by the SEC after incorrectly marking short sales as long sales for the duration of five years.
“Compliance with the order marking requirements of Reg SHO is a key component of regulatory efforts to curtail abusive market practices, including ‘naked’ short selling,” said Mark Cave, Associate Director of the SEC’s Division of Enforcement.
“This action against Citadel Securities demonstrates that a broker-dealer’s failure to comply with the requirements of Reg SHO can have negative downstream consequences on the accuracy of the firm’s electronic records, including its electronic blue sheet reporting, depriving the Commission of important information about the markets it regulates.”
Should firms, such as Citadel, have total control of pricing the market?
Or is this is a direct violation of the laws of supply and demand?
Leave your thoughts below — share this article on X.
Also Read: “The Game is Rigged”, Says Ex-Citadel Data Scientist
Other Market News Today
SEC Chair Gary Gensler now takes an unexpected stance against hedge funds in his latest interview with CNBC.
The Chairman, who’s been heavily criticized by retail investors for failing to create real change in the market, is making it clear on just how important short selling transparency truly is.
For years now, the hedge fund industry has been fighting against the SEC’s new rules which would require more disclosure of short sale transactions, Citadel Securities included.
The SEC approved new rules in October related to short selling.
The first rule required certain fund managers to report their short sales to the SEC within 14 days at the end of the month.
The second rule requires that financial companies that facilitate securities loans disclose information about those transactions to FINRA on a daily basis.
“Remember the events around GameStop nearly three years ago?” Gensler said.
“We have a lot of transparency in the long side, let’s add transparency to the short side that Congress mandated.”
SEC Commissioner Jaime Lizarraga stated in October that securities lending facilitates illegal trading.
“As with securities lending, short sales, provided they are conducted in compliance with applicable rules, can play a valuable price discovery role in our capital markets.
That said, they can sometimes contribute to, or even cause, precipitous price declines, facilitate market manipulation, and generate market uncertainty and volatility”, the Commissioner said.
Now Gary Gensler is pushing short sale transparency.
“Congress weighed in after the financial crisis and mandated that the SEC address and have rules for transparency around short selling for investment managers,” he said in an interview with CNBC on Thursday.
“I got to the agency nine years later and the agency had not done a congressional mandate. I’m very proud we took it up.”
This is a developing story.
Also Read: South Korea Regulators Now Probe Into Illegal Short Selling
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