In a recent interview conducted by ‘We The Investors’, SEC Chairman Gary Gensler says he understands retail frustrations.
But retail investors were quick to give the Chairman backlash, stating actions speak louder than words.
While ‘We The Investors’ has taken a historic step towards representing the retail community in front of regulators as a whole, many retail investors remain skeptical, lacking trust from government leaders.
The SEC Chairman says that short selling is a challenging area where the SEC is still working and pursuing focus on.
One of the biggest challenges according to Chairman Gensler is that Wall Street powers will send stacks of reports highlighting rebuttals on proposals aimed at protecting retail investors.
Dave Laurer asked the SEC Chairman if dark pools suppressed the price of stock and whether retail investors could influence the price of a stock if majority of orders traded in the lit exchange.
While there was no direct answer to the suppression of price, the Chairman says that with so much trading happening off-exchange, he doesn’t think it’s a leveled playing field as dark pools give institutions an unfair advantage.
Retail investors as individuals don’t have the power to move the markets, but retail orders combined could have significant price impact, said the SEC Chairman.
“FINRA must be investigated”, says The Retail Community
Self-regulated organization FINRA has been receiving a lot of attention on social media recently.
While FINRA requires firms to be able to meet their short sale requirements as well as have a process to close out fails to deliver within their required timeframes, the organization allows the manipulation in the markets to happen.
FTDS (fails-to-deliver) are mounting up every month according to SEC data, and FINRA is unable to get firms to close out these obligations.
The retail community is calling it foul play, alleging the possibility of lobbying within the self-regulated organization.
But despite the falling prices from both AMC Entertainment and its equity (APE), the company continues to trend on social media.
Investors haven’t been scared off so easily but rather empowered to fight for transparency in the markets.
What Are Your Thoughts on AMC Entertainment?
Are you a shareholder that is still buying and holding?
Leave your thoughts down below for the community to see.
Only 1% of retail traders plan to sell off their investments in 2023, according to a survey from Finimize, while 65% will continue investing and 29% plan to add to their portfolios.
The survey of over 2,000 retail investors across Europe, Asia and the U.S., found that over 80% think the worst of the stock market rout will be over within six months, says CNBC.
The majority (72%) of the traders plan to back individual stocks next year, with 64% favoring Big Tech names like Apple, Microsoft, Google and Meta.
Even the AMC and GameStop communities continue to stay bullish on these companies.
In 2023, most individual investors plan to invest the same amount or more despite the cost-of-living crisis, according to a new survey from London-based investing insights platform Finimize.
“This data is proof that even in the current market environment, the majority are seeing volatility simply as part of the economic cycle thanks to access to information and growing experience with investing,” said Max Rofagha, Finimize’s CEO, in a press statement Wednesday.
I’ve been fortunate enough to have seen the rise of retail investors for the better part of 2+ years against Wall Street.
Conflicts of interest amongst Wall Street, banks, and mainstream media were uncovered during the ‘meme stock’ frenzy in January of 2021.
But it didn’t stop there.
Throughout 2021 and 2022, the retail community has raised awareness of market injustices, claiming the SEC’s chairman Gary Gensler has only been complicit to the illicit activities that occur on Wall Street.
The disadvantage retail investors have over hedge funds has never been clearer.
Between naked shorting, FTDs, OTC trading, Dark Pool trading, PFOF, and short and distort campaigns, the cat has been out of the bag.
The question now is what is being done to tackle the problems retail investors are facing?
Wall Street has been able to take advantage of the little guy through the predatorial practices mentioned above with no repercussions from regulators.
Will retail investors continue to rise against Wall Street in 2023?
There are no doubt activists will continue to push reform until there is real change that levels the playing field for retail.
People Are Waking Up to Mainstream Media
Elon Musk has been calling out mainstream media on Twitter for misleading information or ridiculous hit pieces.
The impact Elon is having on Twitter is something that has not been seen.
He’s been able to raise awareness by simply ratioing mainstream media accounts, often times putting them in their place.
People have always voiced their opinions and concerns with mainstream media, but now the people have the biggest influencer in the world backing them up.
Citizen journalism has already been exponentially rising as blogs and independent media websites begin to report what mainstream media is failing to report.
Billionaire investor Ken Griffin, the founder and CEO of multinational hedge fund Citadel, warned that the collapse of cryptocurrency exchange FTX could weaken confidence in financial markets at large and hurt the ability of younger investors to save for retirement.
Ken Griffin told Fox Business, “FTX is one of these absolute travesties in the history of financial markets.”
Join the newsletter to stay informed by receiving market alerts and notifications straight to your inbox.
Citadel’s Ken Griffin Says Retail Investors May Likely Ditch the Markets
Griffin expressed concern that losses sustained by younger investors who lost money due to FTX may make them less likely to invest their savings in capital markets, including traditional instruments like stocks and bonds.
“The confidence, though, of a generation in financial markets has also been shaken. That’s really awful because the 20-some-year-olds to 40-year-olds who are so engaged in crypto — they’ve got to save for their retirement, and if they don’t believe or trust in financial markets, this is a huge problem. They need to own stocks, they need to own corporate debt, they need to partake in our global capital markets,” Griffin said.
Citadel is currently partnering with Virtu, Schwab, Paradigm, Sequoia, and other Wall Street giants to form EDXM Crypto Exchange.
A cryptocurrency exchange that is supposed to provide transparency and lower transaction costs through the use of high liquidity and tight spreads.
But concerns are growing within the retail investor community as Citadel enters the crypto space, calling it an outrage due to the hedge funds’ long history of abuse of power.
“The bottom line is American investors have really gotten hurt here to the tune of hundreds of billions of dollars in decline in market cap in crypto over the last two years. I mean that really strikes at the entire core essence of what investor protection is all about,” Griffin said.
SEC commissioners have released a statement on the SEC’s website regarding Gary Gensler’s Agenda.
Commissioners Hester Pierce and Elad Roisman are disappointed with Gary’s proposals, noting it fails to include proper investor protection.
The retail community’s concerns have fallen upon deaf ears when attempting to reach Gary Gensler.
The SEC’s Chairman has failed to establish a relationship with retail investors and protect them against market injustices.
Is it time to replace the SEC’s Chairman due to negligence of retails rights?
Here’s what commissioners at the SEC are saying.
Welcome to Franknez.com – while Gary Gensler had a real opportunity to win retail, he chose not to take matters seriously. Now he’s under intense scrutiny.
Let’s get started!
No Sign of a Fair Market on Gensler’s Agenda
“It fails to include any items intended to facilitate capital formation and misses opportunities to foster fair, orderly, and efficient markets and further investor protection”, says the statement.
Titled, “Falling Further Back“, the commissioners mention Gensler’s agenda plans to redo recently completed rules, and add new regulatory obligations, and constrain investor choice.
This sounds like Gary Gensler is anti-retail investor.
To constrain investor choice is to force a particular course of action.
Recent rules made by the SEC protect retail investors in some form against hedge funds, so why does Gary Gensler want to alter these existing and completed rules?
To impose new regulatory obligations on retail investors sounds rather restricting if you ask me.
Another issue these commissioners encountered in Gensler’s Agenda is the neglection of helping companies raise capital by lowering their thresholds.
Higher thresholds provide a plethora of opportunity to employees, businesses, and small investors.
Abandonment of OTC Trading Regulations
The commissioners are disappointed that the agency is no longer considering the approval of regulating the quality of OTC transactions.
OTC, or over the counter markets is where trading occurs outside a centralized exchange such as the NYSE.
OTC trading provides hedge funds with a loophole to commit fraud since there is less regulation and wider bid-ask spreads to manipulate the market.
Keep in mind commissioners over at the SEC are disappointed with these choices.
It is not common for colleagues to speak out against one another.
But their hands are tied behind their back.
It’s going to take the community to raise awareness surrounding these alarming concerns that allow financial institutions to manipulate the market.
Low CAT Data Security Leaves Investors’ Data Vulnerable
Cyber security is massively important in today’s world and commissioners over at the SEC say Gensler’s agenda fails to prioritize action on data security.
The CAT system, also known as consolidated audit trail, is the current computer system used to record orders, quotes, and trades and identifies the brokers dealing them.
They fear that slowing down the protections around the CAT system leaves investors’ data vulnerable.
Measures were supposed to have taken place last spring but have now been put off.
The end of the statement reads, “We urge the Commission to apply our scarce resources toward better uses than undermining recent precedent and depriving the markets and investors of these rules’ benefits.”
If the SEC is not properly funded by our government to take appropriate measures in the market, then this too causes systemic risk.
There’s no question the SEC Chairman must be replaced but that is only my opinion.
Leave Your Thoughts Below
Why do you think Gensler’s agenda is aimed towards regulating retail investors?
Judges Rao, Walker, and Sentelle, asked tough questions during the first part of this Citadel vs SEC lawsuit hearing.
The hearing took place yesterday, October 25th, 2021 but continues today.
I’m going to be breaking down parts of the hearing and summarizing key points.
I will also be linking the video of the live lawsuit hearing for your viewing pleasure.
Welcome to Franknez.com – the Citadel vs SEC lawsuit hearing has commenced. Be sure to bookmark this page is this developing story unfolds.
Let’s get stared!
The lawsuit hearing started with Judge Walker asking Mr. Wall, Citadel’s lawyer, “Mr. Wall, do you think latency arbitrage exists?”
To which Mr. Wall responded, “[stutters] I don’t think the court has to get into it..”
And this set the entire mood of what was about to go down.
To start off, all three judges were great.
Both Mr. Wall and Catherine Stetson of IEX, were asked very fair questions.
Let’s begin with Citadel’s argument against SEC and IEX technology.
Citadel Argument Against The SEC
In the legality of things, Citadel Securities is suing the SEC for ‘violating’ the Administrative Procedure Act that sets requirements for making changes to agency regulations.
As you know, the changes the SEC made was approving the D-Limit order through the IEX Exchange.
This D-Limit order eliminates market arbitrage and predatory tactics against retail investors by using AI technology to level the share prices of stock throughout all exchanges and offering higher and better quality prices.
Citadel Securities says the SEC disregarded important data showing that the rule would hurt retail investors.
On a side note, Citadel Securities is not for retail investors.
Retail investors do not want their orders going through Citadel nor any association having to do with the market maker.
Citadel Securities is not just a market maker, but a hedge fund and dark pool altogether.
Their predatory tactics against retail investors have suppressed the momentum rallied by the AMC and GME community looking to spark a short squeeze from these heavily and overleveraged stocks.
What Is The Data That Would Hurt Retail Investors?
According to Mr. Wall, the data the SEC missed that would hurt retail investors is that share prices would be higher due to IEX.
He argues that IEX is not sufficiently tailored for retail investors but fails to identify exactly how they miss the mark.
Mr. Wall is suggesting that a leveled playfield would harm retail investors because IEX is able to set better and higher prices than their current model…
It seems Citadel wants to protect retail investors from paying higher and more accurate share prices across all exchanges?
Ladies and gentlemen, this argument is pitiful.
Retail investors have been fighting for a fair market and for a leveled playfield where high frequency trading isn’t affecting their trades and long-term investments.
In simpler terms, IEX would not hurt retail investors but rather lay a foundation towards a more effective and fair market.
It’s this very reason the hashtag #CitadelIsNotForRetail has been trending on Twitter.
I think it’s fair to say that if we took a vote from retail investors, majority would vote for an IEX solution.
IEX Just Wants Liquidity (Bigger Market Share)
Mr. Wall argued that the premise doesn’t even surround latency arbitrage or market arbitrage but rather IEX’s desire for more liquidity, or bigger market share.
When avoiding questions about predatory tactics often used by high frequency trading firms, Mr. Wall deflects confirming the current use of market arbitrage by claiming IEX simply wants to gain liquidity.
In the lawsuit hearing, Mr. Wall confirms Citadel processed up to 56% or retail orders within a month time-frame.
It seems Citadel Securities is more concerned about losing market share than protecting retail.
But that’s not difficult to see.
Citadel Securities has proven to abuse their power and we’ve seen this specifically in AMC and GME stock.
As one of the top short sellers of the two stocks, we’ve seen millions of failure-to-delivers get reported, and the overextension of dark pool trading and even naked shorting occur.
High frequency trading has further given Citadel Securities a massive advantage over retail investors going long on these stocks.
Citadel Securities Argues No Latency Arbitrage Has Taken Place
Mr. Wall mentions that maybe a decade ago latency arbitrage could have been possible but not in today’s world.
This is where we see Catherine Stetson of IEX step in to give her stance in this lawsuit hearing.
“Citadel Pays Hundreds of Millions To Brokers”
Catherine Stetson made a great entrance providing backing information that IEX data has indeed found latency arbitrage.
IEX Exchange is the firm that has introduced innovation to the market with its D-Limit order.
The D-Limit order uses AI technology to execute high quality predictions across the market to set higher and more accurate share prices.
This order type eliminates market arbitrage strategically used by high frequency trading firms such as Citadel Securities and gives retail investors a fair playing field.
When orders are process by Citadel Securities, they are able to move them through several different exchanges, allowing them to profit from slower loading share prices on foreign exchanges.
Orders being process through IEX’s model enables the share prices to load equally amongst all exchanges.
Citadel Securities argues that this model intervenes with the natural laws of the stock market.
The same ones that have allowed them to take advantage of market participants.
Catherine Stetson made a valid point when she said, “Citadel pays hundreds of millions of dollars to get retail orders, and profit from them.”
During the lawsuit hearing, Judge Walker sternly addressed Mr. Wall by saying, “You’re the one who’s trying to regulate your way into market victory.”
It’s not difficult to see the intentions of both parties.
“We Are In The Middle of A Speed-War We Never Signed Up For” – Catherine Stetson
Catherine Stetson made a remarkable statement that addressed the real issue of high frequency trading in the markets.
Her statement regarding retail investors participating in a speed-war we never signed up for sums up the deceit of market maker, hedge fund, and dark pool, Citadel Securities.
This is a statement declaring change in our markets.
This is a statement fighting for a fair market, and a voice aimed towards protecting retail investors.
IEX is seeking to eliminate market arbitrage from high frequency trading firms and begin processing orders that will put retail and financial institutions in the same playfield.