The White House has vowed to monitor illegal short selling activity after bank stocks have taken a massive plunge.
Shares of PacWest Bancorp (NASDAQ:PACW) fell more than -50% on Thursday and are down more than -70% in the past week alone.
Volume surged to 106.9 million, six times its average trading volume of only 17 million.
(Reuters) U.S. federal and state officials are assessing the possibility of “market manipulation” behind big moves in banking share prices in recent days, a source familiar with the matter said on Thursday, as the White House vowed to monitor “short-selling pressures on healthy banks.”
Shares of regional banks continued to fall this week after the collapse of First Republic Bank, the third U.S. mid-sized lender to fail in two months.
Short sellers made $378.9 million in paper profits on Thursday alone from betting against certain regional banks, according to Ortex.
Increased short-selling activity and volatility in shares have drawn increasing scrutiny by federal and state officials and regulators in recent days, given strong fundamentals in the sector and sufficient capital levels, said the source, who was not authorized to speak publicly.
“State and federal regulators and officials are increasingly attentive to the possibility of market manipulation regarding banking equities,” the source said.
White House press secretary Karine Jean-Pierre said the Biden administration was closely watching on the situation.
Temporary Short Selling Ban
“This volatility is being fueled by emotion and misinformation that does not reflect the strong underlying fundamentals of our banks,” Johnson said in a statement.
“These institutions remain resilient and well-capitalized, and Americans can rest assured their deposits are safe.”
The S&P 600 bank index dropped over 3% on Thursday.
PacWest Bancorp shares tumbled over 50% after it confirmed it was exploring strategic options.
Western Alliance Bancorp denied a report from the Financial Times that said it was exploring a potential sale, and said it was exploring legal options.
Its shares plummeted more than 38%, with trading in the stock halted multiple times.
The increased short-selling activity has triggered some calls for a temporary ban, but an SEC official told Reuters on Wednesday the agency was “not currently contemplating” such a move.
The SEC first warned investors in March, during a previous period of high market volatility surrounding the collapse of Silicon Valley Bank and Signature Bank, that it was carefully monitoring market stability and would prosecute any form of misconduct.
Related: Congress Now Investigating Naked Short Selling Fraud
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Shorting/naked shorting is a license for brokerages/hedge funds to use fraud to steal from retail investors. GS got caught illegally listing shorts as longs for 3 years by FINRA (per an earlier article from you), but was only given a tap on the wrist ($3 million fine while likely stealing billions/trillions). Why hasn’t AG/DOJ filed criminal charges against GS, why haven’t they tracked down which investors had money stolen from them by GS, why haven’t they returned the stolen money to the victims? Why hasn’t media (such as 60 Minutes, or the 6 corporations that control media in U.S.) done an expose on the massive fraud being perpetrated on retail investors by Wall Street? A lot of questions to answer, but sadly oversight is almost nonexistent.
So call me stupid but the White House which the administration elected/nominated Gary Gensler lol for his position is going to do something….this must be a joke!
Well well well, sucks to suck doesn’t it? Maybe they should have been more proactive with all of the thousands of people telling them about the blatant chicanery happening over the last several years. Justice = Just us.
White House vowed to monitor “short-selling pressures on healthy banks.” What about the rest of the Market? Just banks is BULLSHIT
Exactly, we need regulators to act on what retail investors have been raising concerns about as well.
But its OK to naked short other non bank stocks into oblivion for years with no repercussions? Typical US regulators. Only interested when it hurts the elite and wealthy.
Leave your thoughts below!