Tag: GME Stock News (Page 1 of 3)

Notorious Short Seller Bill Hwang Now Faces Painful Testimony

Notorious short seller Bill Hwang now faces a painful testimony by his head trader who states the hedge fund manager encouraged illegal trading.

Bill Hwang’s top trader at Archegos Capital Management gave damning testimony against the boss, telling a jury Hwang told him to do “the opposite” of what a “normal fund” would.

William Tomita took the stand Monday for what’s expected to be several days of testimony as the prosecution’s star witnesses in a criminal case against Hwang over the spectacular implosion of Archegos in 2021, reports Bloomberg.

He immediately admitted committing “financial crimes, namely market manipulation and lying to banks,” then implicated Hwang.

“I was directed to do so by my former boss,” Tomita said, identifying Hwang in court.

Of the major witnesses, Tomita worked most directly with Hwang himself and is therefore key to connecting the Archegos founder to the charged conduct.

Tomita said Hwang told his traders to use tactics that would maximize the effect on share prices, rather than gradually building their positions at the lowest cost and trying to minimize the impact of their own trading on the market.

At Archegos, Tomita said, he could see the effect of the volume of the firm’s trades versus others and knew he was moving the market. “I could see that it was me that generated the stock price,” he testified.

Hwang and his co-defendant, former Chief Financial Officer Patrick Halligan, have pleaded not guilty and are in the fifth week of testimony against them in their trial in lower Manhattan.

Hwang’s legal team claims he used multiple counterparties to minimize risk, not to improperly maximize leverage or conceal the nature of their trading as the government contends.

Halligan, the CFO, had no role in trading but is charged in connection with Archegos’ alleged lies to bank counterparties.

However, another key government witness, former chief risk officer Scott Becker, has already told the jury he duped banks into believing the firm’s positions were far less risky than they were.

In the end, Archegos’ meltdown would cost banks including Morgan Stanley $10 billion and help bring down Credit Suisse Group AG.

Tomita, who handled the trading on which the case against his former boss turns, provided a window into the tactics that catapulted Hwang’s fortune from $1.5 billion to $36 billion in the year before the firm’s collapse.

Stock market manipulation on Wall Street has gained more attention since the ‘meme stock’ frenzy of 2021.

The question now is, what are our regulators going to do about it?

Also Read: Massive Banks Are Now Getting Fined For Illegal Short Selling

Other Stock Market News Today

Market News Today - Notorious Short Seller Bill Hwang Now Faces Painful Testimony.
Market News Today – Notorious Short Seller Bill Hwang Now Faces Painful Testimony.

South Korea now finds banks pursued an illegal shorting scheme, uncovering a whopping $211.2 billion won ($156m), in manipulative trades.

South Korea’s financial watchdog said it has so far uncovered 211.2 billion won ($156 million) worth of illegal short trades by nine global investment banks, providing its latest formal update on a probe that began late last year, per Bloomberg.

The nine banks, whose names weren’t disclosed, violated mostly procedural rules while collectively shorting 164 stocks, according to a briefing given by the Financial Supervisory Service.

It is continuing to probe five other banks in the matter.

Two of the nine banks are already facing penalties imposed by the financial authorities and have been referred to prosecutors for further investigation for allegedly violating the nation’s capital markets law, Hahm Yong-il, senior deputy governor at the FSS, told reporters Friday.

The watchdog plans to review penalties on the other seven banks.

Activities of global banks and hedge funds have come under increased scrutiny in recent months in South Korea, as authorities boost steps to weed out naked short selling — a practice of selling shares without even borrowing them first.

While short selling remains legal in many markets, it is a contentious political issue in the emerging Asian nation, with its powerful retail investors often blaming it for stock declines, reports Bloomberg.

“The FSS found that the violation rate exceeded 20% in some cases, which suggests that illegal transactions have a big impact on a certain stock,” the financial regulator said in a statement earlier this year.

“It’s necessary to consider the impact of illegal short sales on an individual stock as such trades hinder fair pricing and increase short-term volatility,” it said.

Bloomberg reports the South Korea’s financial watchdogs derived the 20% figure by dividing the amount of violated orders on a certain stock by its daily trading value.

The FSS did not identify the equities that saw illegal trades and declined to say how frequently the trades exceeded that ratio.

In November, South Korea imposed a ban on short selling through mid-2024, a decision that drew big celebration from retail investors in the country.

Investors in the AMCMULNGTIIFNGR, and MMTLP communities are just a few of many who have been raising awareness of the malpractice happening in the U.S stock market via X.

Market News Today – South Korea Now Finds Banks Pursued Illegal Shorting Scheme.

Also Read: SEC Commissioner Now Says Securities Lending Facilitates Illegal Trading

Market News Published Daily 📰

Market News Today - Notorious Short Seller Bill Hwang Now Faces Painful Testimony.
Market News Today – Notorious Short Seller Bill Hwang Now Faces Painful Testimony.

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GameStop Short Sellers Now Down A Whopping $1 Billion

GameStop short sellers are now down a whopping $1 billion in May according to new data from S3 Partners analysts.

Shares of the gaming company soared more than 66% on Monday, hitting nearly $37 from a previous close of $17.39.

GME stock is currently up more than 183% in the past month alone.

Media speculates GameStop shares rose due to the return of iconic investor, Keith Gill, AKA Roaring Kitty.

Shares of AMC Entertainment stock also rose by more than 50% on Monday, hitting $4.44 from its previous close of $2.95.

The movie theatre stock is currently up 79% in the past month alone.

According to financial analytics firm, S3 Partners, GameStop short sellers have accumulated approximately $1 billion in paper losses.

“GameStop shorts are down in estimated $1 billion in May paper losses with todays +50% pop in early trading,” said Matthew Unterman on X.

“@S3Partners multi-factor squeeze risk score has been registering a max of 100 every day since May 3rd.”

S3’s Squeeze Score overlays the significant components for a squeeze, higher financing costs and unrealized losses, to their Crowded Score to identify shorted stocks with higher short-side volatility and identifies stocks that have the necessary conditions to be “squeezed”.

Squeeze Scores of 70-100 identify squeezable stocks, and scores over 90 have a significantly higher risk of a squeeze and the potential for the resulting buy-to-covers to pushing stock prices even higher, according to the companies website.

With Roaring Kitty back, does this mean meme stocks are about to blow up again based on hype and momentum again?

I’d love to hear your thoughts on this. Leave a comment down below.

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Also Read: South Korea Now Finds Banks Pursued Illegal Shorting Scheme

Market News Published Daily 📰

Market News Today - GameStop Short Sellers Now Down A Whopping $1 Billion.
Market News Today – GameStop Short Sellers Now Down A Whopping $1 Billion.

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Analyst: AMC and GME Have Highest Squeeze Potential

Market News Daily - Analyst say AMC and GME Have Highest Squeeze Potential.
Market News Daily – Analyst says AMC and GME Have Highest Squeeze Potential.

S3 analyst says AMC Entertainment (NYSE:AMC) and GameStop (NYSE:GME) stock have the highest squeeze potential in the market.

“As the broader stock market has been on a tear for about a month, things are looking grim for investors with big short positions in stocks like AMC Entertainment Holdings Inc. and GameStop.”

AMC’s and GME’s short interest data is what ignited the massive rallies in 2021.

Today, both AMC and GME have a high short interest of 26.69% (AMC) and 20.73% (GME).

AMC’s short interest was only 25% when it surged to its all-time high of $72 per share in June of 2021.

Short interest dropped to 14% as short sellers closed positions only to pick right back up throughout 2022 and 2023.

Both AMC and GameStop shares have been suppressed from rising through heavy dark pool trading and suspiciously through naked short selling, evident in high FTDs (fails-to-deliver).

Two years later and GameStop is finally a profitable company.

AMC Entertainment, the largest movie theatre chain in the world, continues to innovate and creatively raise cash with a mission to erase its debt accumulated during the pandemic.

Hedge Funds Face Big Risks

Ihor Dusaniwsky, head of predictive analytics at financial technology and analytics firm S3 Partners, compiled a list of those most vulnerable stocks, headed by such names as AMC (AMC), GameStop Inc. (GME), Coinbase Global Inc. (COIN) and CarMax Inc. (KMX).

“One factor that is also killing profits for short sellers is the borrowing costs on stocks that no one is willing to part with, and the stock that figures highest on that list is AMC.”

AMC’s cost to borrow recently skyrocketed to more than 1,000% with its cost to borrow average currently being reported at 928%.

“Short sellers want to short the stock, but they are not able to get a stock borrow locate and therefore cannot execute their short on the street,” Dusaniwsky told MarketWatch in an interview.

“But, when any stock borrows become available — lenders, brokers know they can charge inflated fees as there is huge demand for the name.”

“In this case there is an AMC–[preferred stock] APE arbitrage trade that will be profitable if the conversion occurs soon because the high financing costs are eating into those expected profits every day, including weekends,” Dusaniwsky said.

But the S3 analyst isn’t the only one stating there is big squeeze potential in AMC and GameStop.

Related: “The Game is Rigged” Says Ex-Citadel Data Scientist

Strategist Says Mother of All Short Squeezes is Here

Market News Today - Analyst: AMC and GME Have Highest Squeeze Potential.
Market News Today – Analyst: AMC and GME Have Highest Squeeze Potential.

Interactive Brokers Chief Strategist Steve Sosnick says there’s big demand to short AMC Entertainment stock.

He says the biggest reason aside from the company’s fundamentals is its new merge with its equity (NYSE:APE).

“It’s very hard to keep the momentum in these things because economic reality does take hold.

Bed Bath & Beyond, at one point was the best performing stock on the board until reality set in and they began defaulting, averted bankruptcy, but using a deal that is so dilutive that it’s unavoidable.”

Sosnick says AMC is in a very special situation because of the proposal to merge APE with AMC common shares.

“Right now we’re seeing such a demand to short AMC partly because of its difficulties but partly because of the special situation.

This really is what they were looking for in some ways as the mother of all short squeezes.

The borrow rate, it costs you 700% to borrow the shares overnight — if you can find them,” said the Interactive Brokers Chief Strategist on Yahoo Finance.

Market News Published Daily

Market News Today - Is Amazon buying AMC Entertainment?
Market News Today – Analyst: AMC and GME Have Highest Squeeze Potential.

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GameStop is Now a Profitable Company, Should You Buy It?

GameStop is now a profitable company
Market News Daily: GameStop is now a profitable company, should you buy it?

GameStop (NYSE:GME) is now a profitable company.

The company posted a quarterly profit for the first time in two years.

Shares soared up to 50% on Tuesday and up to 40% on Wednesday as we saw big buying volume coming in.

For the quarter ended Jan. 28, net sales dropped slightly to $2.23 billion from $2.25 billion in last year’s fourth quarter.

GameStop also posted a profit of $48.2 million, or 16 cents a share, compared to a loss of $147.5 million, or 49 cents, a year ago.

Since the ‘meme stock’ frenzy, we know GameStop has been working on cutting costs significantly which actually helped the company gain profitability.

Selling, general and administrative expenses came in at $453.4 million for the quarter, or 20.4% of sales, compared to $538.9 million, or 23.9% of sales, in the year-earlier period.

CEO Matt Furlong said on an investor call the company is going into 2023 with further plans to cut excess costs including in European markets, where it has already exited and begun to pull out of some countries.

He said that GameStop is also considering bolstering its business with higher margin categories such as toys.

“GameStop is a much healthier business today than it was at the start of 2021,” he said.

Is the GameStop Short Thesis Dead?

GameStop remains heavily shorted with a high short interest of 24.08%.

This means short sellers are still holding on to their short positions.

The company is no longer in danger of bankruptcy and has now posted profits after two years.

Will short sellers finally close their positions?

The effects would certainly trigger another short squeeze like we saw in January of 2021.

But experts still believe the markets haven’t seen a bottom which means we’re likely to see continued shorting in GameStop until the economy as an entirety begins to shift again.

The GameStop short thesis may be dead, but short sellers have not entirely left yet.

Though it is important to note that short sellers have lost $610 million in GameStop since the start of the week.

If GME stock continues to rise, it might put enough pressure on short sellers to just call it quits, sending this rocket back to the moon.

Is GameStop a Buy In 2023?

GameStop is now a profitable company in 2023, putting the company out of great risk from bankruptcy.

Its shareholder base continues to hold the company stock in an effort to squeeze short sellers from their positions once again.

Is it worth investing money you can afford to lose in GameStop right now?

Absolutely.

The company has for the most part eliminated the short thesis with its profitability and short sellers are now stuck holding significant losses.

Rising share prices like we saw in January of 2021 is all the stock needs to squeeze short sellers from their positions.

While many people made money from GameStop during the ‘meme stock’ frenzy, many incurred heavy losses too.

If we see history repeat itself in 2023, be sure to have a plan.

Market News Published Daily

Market News Today - Can the SEC suspend dark pools?
Market News Today – GameStop is now a profitable company, should you buy it?

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The SEC Green-Lighted Naked Shorting of IPOs in 2015

SEC Naked Shorting
Market News Today: The SEC green-lighted naked shorting in 2015.

Forbes published a piece surrounding Uber’s ‘troubled’ IPO stating that the SEC green-lighted naked shorting of IPOs in 2015.

“A curious thing happened during Uber’s troubled initial public offering last week: naked short selling of UBER shares by the banks involved in placing Uber’s IPO, according to several sources who confirmed this to CNBC.

Normally, naked short selling is illegal.

But it was legal in this case, and it gave the banks a chance to profit–as investors lost money–when the IPO traded down 18% in its first two days.

Naked-shorting of IPOs by banks, which the SEC green-lighted as recently as 2015, has changed IPO market dynamics by altering the relative power between banks, issuers and investors. 

To the detriment of investors, banks now have less fear of incurring major losses from pricing an IPO too high because banks now have a tool (naked shorting) to protect their downside risk.”

Forbes said that thanks to the SEC’s explicit statement allowing naked shorting during IPOs, banks have a chance to win regardless of what the IPO is priced at, a fear they had prior to getting the green light on naked shorting.

In a space call with Genius Group ($GNS) CEO Roger Hamilton, a user had stepped up to question the proof of naked shorting discussed about in sort of media or case.

As you can imagine, speakers on the panel were quick to give the user the information they lacked to research in the first place.

But it’s there, and this is just one case on the proof of naked shorting in the market.

GNS Shares Plummet After IPO

2023 GNS #NakedShortsWar.
2023 GNS #NakedShortsWar.

Genius Group CEO Roger Hamilton said he suspected naked shorting was happening in his company stock after shares had gradually plunged after their IPO date.

Roger Hamilton has been leading the fight against naked shorts by not only raising awareness on social media but also by taking legal action.

The company just launched phase 2 of their legal battle against naked short selling.

One of the topics discussed in the space call with Roger was of dual listing using the blockchain.

My thoughts on the blockchain are that it provided accountability and less stress on investors when dealing with manipulative shorting tactics.

It’s still a very new innovation, especially when discussing a tradable blockchain exchange.

A great effort to fight naked shorting nonetheless.

“Naked shorting is impossible to do when securities are issued natively on a blockchain. Had Uber’s shares been issued on a blockchain rather than through legacy systems, banks simply would not have been able to issue more UBER shares than the quantity of shares outstanding. The price-suppressive impact of the naked shorting–however large or small it was in the Uber case–simply could not have happened,” said Forbes.

Related: Citadel Said in 2004 Payment for Order Flow Creates Conflicts and Should Be Banned

A History on Naked Short Selling

What is naked shorting?

Naked short selling, or naked shorting, is the practice of short-selling a tradable asset of any kind without first borrowing the asset from someone else or ensuring that it can be borrowed.

Naked shorting was enabled legally by UCC Article 8 in 1994, owing to a combination of two features: (1) indirect ownership of publicly-traded securities and (2) a special exemption that obviates the normal requirement that the seller prove in advance that it actually owns the property it is selling to a buyer.

“What we actually own is an IOU from our broker-dealer–a contractual right to the shares instead of the real thing. Your broker, in certain circumstances, has the right to conjure and sell you IOUs to more shares than actually exist,” says Forbes.

The US legal system made a policy decision to favor liquidity over solvency–to favor negotiability of securities over keeping accurate and timely records of who really owns what.

Patrick Byrne brought naked shorting to the attention of regulators but was ridiculed and eventually paid off with a winning settlement to lay low.

After the events of the ‘meme stock’ frenzy in 2021, retail investors came together and scrutinized the SEC, DTCC, and FINRA for allowing blatant market manipulation to occur.

Retail investors were momentarily prohibited from trading shares of AMC and GameStop due to liquidity concerns within several market makers and brokers including Citadel and Robinhood.

The DTCC waived billions of dollars in collateral to reset the game for the big players, cheating retail investors out of their money.

“The problem is that “overissue” of securities suppresses market prices. This is one of many subtle ways that value is skimmed from Mom and Pop investors in securities markets.” – Forbes.

Market News Published Daily

Market News Today: The SEC green-lighted naked shorting in 2015.
Market News Today: The SEC green-lighted naked shorting in 2015.

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