Author: BlackMask Financial

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Silver swept up by GameStop retail frenzy, prices soar

https://youtu.be/i5rplNntoi8

Silver prices surged to a five-month high on Monday, silver-mining stocks leapt and coin-selling websites were swamped as small-time investors piled in to the metal, the latest target of a retail-trading frenzy that has set financial markets on edge. Organised in online forums and traded with fee-free brokers, such as Robinhood, the phenomenon has driven a 1500 per cent rally in the shares of videogame retailer GameStop as the crowd targets assets big fund managers had bet against. The move into silver, following thousands of Reddit posts and hundreds of YouTube videos suggesting that a rise in the physical price could hurt large investors with bets on it falling, is a foray in to a much bigger and more liquid market. Spot silver leapt as much as 7.4 per cent in Asia to $28.99 an ounce, taking gains to about 15 per cent since last Wednesday and the price to its highest since mid August. “The Reddit crowd has turned its sights on a bigger whale in terms of trying to catalyse something of a short squeeze in the silver market,” said Kyle Rodda, an analyst at brokerage IG Markets in Melbourne. “This is their big, bold Moby Dick moment,” he said.   Volumes in small miners’ stock in Australia were unprecedented and jumps in some exploration firms, which do not actually produce silver, topped 90 per cent. Bullion dealers had brisk trade. “Yeah, we’re seeing buying and it’s been sparked by this subreddit,” said Nicholas Frappell, global general manager at ABC Refinery in Sydney, adding such customers liked to buy kilogram bars or smaller because of the convenience. The Perth Mint said it noticed elevated demand for silver in the United States via online dealers. The popularity of dabbling in stockmarkets has grown during the COVID-19 pandemic as volatility, stimulus cheques and lockdowns have driven account openings and investment. The craze hit fever pitch last week when the GameStop pile-on resulted in a “short squeeze,” which turned price gains stratospheric as hedge funds with bets against the stock desperately bought it at high prices to close their positions. Discussion turned to silver late last week as Reddit posts suggested that higher prices could hurt big banks with large short positions, and said buying easy-to-access exchange-traded silver funds could quickly ramp up the metal’s value. “(The) gain in silver prices is a very solid lift … it certainly does suggest that the impact of messaging in social media is becoming much more significant,” said Michael McCarthy, strategist at broker CMC Markets in Sydney.

Global short interest in silver, or the cumulative value of bets it falls in price, is equivalent to about 900 million ounces – just short of global annual production. Banks and brokers hold most of that, with about 610 million ounces, though it is not clear whether they are net short on the metal or whether their bets offset very big physical holdings.

Nevertheless, the squeeze is moving money. Australia’s ETF Securities’ Physical Silver fund had a daily record A$40 million ($30.6 million) in inflows by Monday afternoon, ETF Securities’ head of product, Evan Metcalf told Reuters. “It’s quite a big day of flows on what was previously around a A$220-odd milion fund,” Metcalf said. “Our product being listed on the ASX kind of gave people a head start timing-wise as well because it’s open before US and European markets.” Those funds can drive silver prices because they end up paying for the physical metal to back the ETF’s units. A silver ETF in Japan surged 11 per cent and the flows could point to more gains for iShares’ US-listed $16.5 billion Silver Trust ETF which rose 5.6 per cent last week.

The broader showdown between small traders and professional short-sellers, besides making paper millionaires of the former, is testing brokers, regulators and other investors’ patience. Robinhood, the online broker used by many new investors has lifted some of the buying restrictions it imposed during wild trade last week, but limits remain on eight companies including GameStop, AMC Entertainment and BlackBerry. US regulators are circling both Robinhood and the Redditers’ forums, while hedge funds nurse their wounds. Melvin Capital, a hedge fund which bet against GameStop, lost 53 per cent in January. In South Korea, where retail traders dubbed “ants” have turbocharged a long equities rally by investing borrowed money are applying pressure to quash a government plan to lift a pandemic-imposed short-selling ban. It is unclear how much longer the Reddit-fuelled rally can run. “I’ll tell you one thing, absolute guarantee this ends in tears, I just don’t know when,” said CMC’s McCarthy. – Reuters. Nick Note: the millennial fucks are cursing for a bruising. I want to SHORT silver so bad i can taste. the dip shits do not understand the intricacies of the game. Holy fuck bat man!
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Republicans press $600bln COVID-19 bill as Democrats ready Biden’s $1.9tln plan

WASHINGTON (Reuters) – Ten moderate Republican U.S. senators urged Democratic President Joe Biden on Sunday to significantly downsize his $1.9 trillion COVID-19 relief package to win bipartisan support as Democrats in Congress prepared to push ahead with his plan this week.

A top White House economic adviser signaled willingness to discuss the ideas raised by Republican senators who floated a $600 billion alternative, but said the president was not willing to compromise on the need for a comprehensive bill to address the public health crisis and economic fallout.

“He is open to ideas, wherever they may come. … What he’s uncompromising about is the need to move with speed on a comprehensive approach here,” Brian Deese, director of the National Economic Council, told NBC’s “Meet the Press” program. “A piecemeal approach … is not a recipe for success.” It was unclear whether the outreach by 10 of the 50 Republicans in the 100-seat chamber would shift plans by congressional Democrats to take up legislation in the coming days. Biden and fellow Democrats are seeking to make use of their control of the House of Representatives and Senate to move quickly on the president’s top goal of addressing the pandemic.

Senate Majority Leader Chuck Schumer has said his chamber would begin work on it as early as this week. House Speaker Nancy Pelosi said Congress would complete a preliminary step before the end of the week.

Congress enacted $4 trillion in COVID-19 relief last year.

Passage of the new relief legislation not only would impact Americans and businesses reeling during a pandemic that has killed about 440,000 people in the United States but also offers an early test of Biden’s promise to work to bridge the partisan divide in Washington. Biden took office on Jan. 20.

Biden’s proposal includes $160 billion for vaccines and testing, $170 billion for schools and universities, and funds to give certain Americans a $1,400 per-person stimulus check, among other provisions. Some Republicans have questioned the overall price tag, while others urged more targeted measures, particularly over the direct payments to individuals. In their letter to Biden, Susan Collins, Lisa Murkowski, Mitt Romney and seven other senators asked Biden for a meeting and said their compromise proposal could be quickly passed with bipartisan support, promising more details on Monday. They said their proposal sought more targeted assistance for families in need and additional funds for small businesses, while echoing Biden’s plan for more funding to boost vaccines and testing as well as support for schools and childcare centers. They also pointed to unspent money from previous COVID-19 relief bills. “Ours is about $600 billion. … We’re targeted to the needs of the American people,” Senator Bill Cassidy, one of the 10 senators, told “Fox News Sunday.” Deese said the White House was reviewing their letter but did not say whether Biden would meet with the group, which also included Republicans Shelley Moore Capito, Todd Young, Jerry Moran, Michael Rounds and Rob Portman. Senator Jon Tester, a Democrat from Montana, told CNN’s “State of the Union” program that the Republicans’ letter was “a positive sign that folks want to work together.” With the Senate split 50-50 and Vice President Kamala Harris wielding the tie-breaking vote, Democrats are considering using a parliamentary tool called “reconciliation” that would allow the chamber to approve the bill with a simple majority. Under Senate rules, legislation usually requires 60 votes for passage.  Nick Note: happy checks are coming and soon and the money will be spent on stocks

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The biggest losers from the GameStop turmoil

There has been nothing like this GameStop  GME, +67.87% saga in recent memory. It’s still early days. But already we can work out some of the groups who are likely to emerge as losers when the dust settles. At least if history is any guide — which, alas, it usually is. some of the big investors in hedge funds are those massive public sector pension funds around America that are already swimming in red ink. They love ‘allocating’ some of the pension money to ‘alternative strategies’ including ‘long-short equity,’ which is a fancy way of saying they take some of the money needed for the pensions of hacks, teachers, firefighters, hacks, police officers, garbage collectors and hacks and throw them at hedge funds of the type that just got hosed, but good. But these are ‘defined benefit’ or final salary pension plans, so if the money isn’t there for the hacks and others when they retire, it will have to be found, and we all know where. Hedgeye, an investment company in Greenwich, Conn., says the economy, and hence the stock market, is always in one of four ‘quads’ — e.g., ‘slowing growth and falling inflation,’ and so on. Well, after 25 years in this business I can tell you the GameStop affair means we are now in ‘Quad Five’ — defined as the period when Things Get Seriously Weird. Like SPACs and bitcoin, this is bubble stuff, the kind of wacko event you see when the Starship Enterprise finds itself at the edge of the space-time continuum and everything goes nuts. And whatever comes after Quad Five is rarely good. Who will lose? Look in the mirror.

ignorance of how this racket works. Hedge funds are essentially a conspiracy against their investors, who are variously known as ‘limited partners,’ ‘clients’ and ‘total suckers,’ depending on who is listening. The way hedge funds work: When the funds go up, the managers take a big chunk of the profits. When the funds go down, the clients eat the losses. Sure, there is some downside for the managers. But it’s limited. And if things get really bad they just wind up the fund and start a new one. A guy at college with me went into hedge fund management. When his fund went well he pocketed millions. When the market turned his fund collapsed. Did he give back the millions? What do you think? Robinhood customers were blocked from trading by a sudden rule change halfway through the game. How’s that for getting hosed? No wonder they were furious. It would be like the referees suddenly deciding to, say, allow pass interference in the middle of the Super Bowl, just when your opponents had just stopped you scoring another touchdown. (Incidentally, lawyers will NOT be among the losers from this saga.) Robinhood has suffered the triple whammy of disastrous public relations, government oversight woes and a cash call. It’s going to be interesting to see how Robinhood recovers from this debacle — or if it can. Nick Note: The biggest funds and hedge funds are taking 100 billion in loses. Their is no way they the piss ants will pull this off. Its really simple government will have to cover the loss to retirees or stop this insanity. we both know what they will choose.

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Interactive Brokers lifts GME options restrictions

(Reuters) – Online trading platform Interactive Brokers Group Inc said late on Saturday it has lifted all trading restrictions on options in GameStop Corp, AMC Entertainment Holdings Plc and others hit by recent market volatility. Nick Note: Game on!

  Interactive Brokers Lifts All Trading Restrictions on Options

Business Wire

GREENWICH, Conn.

Interactive Brokers Group (Nasdaq: IBKR), a global brokerage firm, announced
today that on Friday it lifted all trading restrictions on options in AMC, BB,
EXPR, GME, KOSS and other options that experienced recent market volatility.
The options, as well as the underlying stocks, are currently subject to
increased margin requirements, which are subject to change depending on market
conditions. The firm continues to monitor these volatile markets.

About Interactive Brokers Group, Inc.:

Interactive Brokers Group affiliates provide automated trade execution and
custody of securities, commodities, foreign exchange and their derivative
products around-the-clock on over 135 markets in numerous countries and
currencies, from a single IBKR Integrated Investment Account to clients
worldwide. We service individual investors, hedge funds, proprietary trading
groups, financial advisors and introducing brokers. Our four decades of focus
on technology and automation has enabled us to equip our clients with a
uniquely sophisticated platform to manage their investment portfolios. We
strive to provide our clients with advantageous execution prices and trading,
risk and portfolio management tools, research facilities and investment
products, all at low or no cost, positioning them to achieve superior returns
on investments. Barron’s ranked Interactive Brokers #1 with 5 out of 5 stars
in its February 24, 2020, Best Online Broker Review.

View source version on businesswire.com:
https://www.businesswire.com/news/home/20210130005024/en/

Contact:

Interactive Brokers Group, Inc.
media@ibkr.com
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Schumer: This Senate will deliver aid fast

WASHINGTON (Reuters) – Democrats in the U.S. Senate will act alone to approve a fresh round of coronavirus stimulus if Republicans do not support the measure, Majority Leader Chuck Schumer said on Tuesday, the morning after securing a deal to exert his newly won leadership. “We want to work with our Republican colleagues to advance this legislation in a bipartisan way. But the work must move forward, preferably with our Republican colleagues, but without them if we must,” Schumer said on the Senate floor. President Joe Biden has made addressing the COVID-19 pandemic, which has killed more than 420,000 Americans, thrown millions out of work and is currently infecting more than 173,000 people per day, a major focus of his first week in office. He’s calling on Congress to approve $1.9 trillion in spending, on top of the roughly $4 trillion authorized over the past year to address the heavy human and economic toll. Schumer’s comment comes the morning after top Senate Republican Mitch McConnell, the chamber’s former majority leader, agreed to dropped his blockade of a deal for a power-sharing agreement in the Senate, where each party controls 50 seats. The Democrats have control of the chamber because Vice President Kamala Harris holds the tie-breaking vote. Biden has called for unity and has urged bipartisan support of his plan, but Republicans have balked at the high price tag and senators of both parties have said they want the package to be more targeted. The White House has scheduled a call with members of the bipartisan group of lawmakers known as the Problem Solvers Caucus on Tuesday, according to a source familiar with the negotiations. The White House is expected to detail how much money remains in the coffers after previous stimulus packages, in a follow-up to a weekend meeting. Meanwhile, congressional Democrats are introducing on Tuesday a bill that would raise the minimum wage to $15 an hour, one of the components of Biden’s coronavirus package, raising the possibility that lawmakers could take a more piecemeal approach to the legislation. Congressional Republicans have traditionally been opposed to such measures. In 2019, only three Republicans voted for a similar minimum wage hike in the House of Representatives. The federal minimum wage has not been changed since 2009, when it became $7.25 an hour. Nick Note: Just what we need a bunch of millennials with plenty of new cash to poor into the stock market. God Is GREAT!

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Last Hurrah! 2 Trillion Stimulus Will Drive the market

Nick Bit: The main takeaway here is Biden said he will pass the stimulus bill with or without Republican vote. And he can do it. That means happy checks are on the way, And the millennias newline embolden will buy the crab out of stocks. And i want to be their for what i regard of the last wave up before the correction, look at the comments below

“It’s pretty crazy because I think I mean, I look at the whole GameStop thing with the stocks as a revenge of the nerds kind of attack on the big boys in Wall Street and against a lot of the big, big trading firms that are out there. This is one of the things with a small guy kind of triumphs. And I think this is the way Robinhood had to stop it, even though they’re one of those smaller, you would think, stealing from the rich, giving to the poor, that they would just let it rip. But I mean, I’m for it to a degree, until it gets out of control. The robo trading, if  i t’s too much, it can really upend things. But I think it’s a good shot across the bow of the big… big traders.” “I think the little man finally got an ounce of what they deserve, and it was the assholes in there that took it from them, they delisted it, Ameritrade, Robinhood, Webull, they all can’t stand to have the little guy win. And that pisses me off. And that’s why it’s f***k the suit. It’s buy Bitcoin. It’s always been that for… for four decades. It shows you that you can be your own bank. You can do your own transactions, verifiable, permission-less, decentralized. It’s the future of commerce. And the assholes in there, they haven’t caught on to it yet. But Grayscale, Michael Saylor, MicroStrategy, they’re starting to dip their feet in. And this is the future of finance right here.” “I think it’s great that rich people are losing money because capitalism is destroying this world, and that’s all I have to say about that.”

STORY: GameStop shares jumped, awarding retail investors the advantage in the latest round of their week-long slugfest against major financial institutions that had shorted the video game retailer. The so-called “Reddit rally” has inflated stock prices for GameStop and other previously beaten-down companies that individual investors championed on social media forums. GameStop surged 83% on Friday (January 29) after brokers including Robinhood eased some restrictions on trading. On Thursday (January 28), GameStop shares slid following the trading halts from Robinhood and other trading apps, which drew outrage from politicians and calls for action from regulators. Headphone maker Koss more than doubled in value, although it and GameStop remained below peaks reached earlier this week. Hedge funds and other short sellers had bruising week. GameStop short sellers endured mark-to-market losses of $19.75 billion so far this year, according to S3. Even so, the stock remained highly shorted with $11.2 billion short interest. GameStop and other companies have said little about the volatility in their shares. Robinhood said Friday it had temporarily disabled a feature on its app that allows users to buy crypto securities instantly. Robinhood has been one of the hottest venues in the retail-trading frenzy but its sudden curbs on buying set off online protests as the firm tapped credit lines to ensure it could continue trading. The brokerage said it had raised more than $1 billion from its existing investors after high volumes and volatility of trading strained it this week. A website on the short squeeze strategy set up by one WallStreetBets participant, told traders with Robinhood accounts to “find a new broker asap,” listing rivals Vanguard, Ameritrade and Fidelity. Both Ameritrade and Charles Schwab placed some restrictions on trade on Thursday. Fidelity says it has not limited trading in the stocks. Nick Note: the game is still on. Once the happy check money runs out and they have leveraged their stocks to the moon… this rocket ship will run out of fuel and crash back to earth.

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A tulip by another name? ‘Gamestonk’ and the case for investor caution

NEW YORK (Reuters) – It sounds like the start of a parable: Investors stuck inside during a pandemic begin to bid up an asset until its price becomes untethered to reality. The value soars until one day the market runs out of buyers and freezes, causing prices to plummet and some unlucky few to lose fortunes more than ten times their annual incomes in the span of a few hours. The date: February 3, 1636. On that day, the infamous Dutch tulip bubble burst during an outbreak of the bubonic plague, illustrating that asset prices can plummet just as quickly as they soar, leaving only pain behind. Now, almost exactly 385 years and another pandemic later, Wall Street waits to see how long it will take for history to repeat itself. Shares of video game retailer GameStop Corp have soared 1,625% since the start of January. Driving the rally are individual investors who have been stuck at home for the last ten months. Many have turned to online forums like WallStreetBets on Reddit and are buying the stock, some as a form of protest against hedge fund managers who wagered that it would fall.

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What pro traders, the Reddit crowd and regulators may do next in the GameStop short squeeze saga

What’s next for the Reddit crowd? Wall Street seems unsure.

The “blow-out-the-short-sellers game” is showing signs of exhaustion, but the ramifications are only just being felt.

What traders can’t agree on is what will happen next. There are four buckets of discussions: How will traders/hedge funds react? How will trading platforms react? How will regulators react? And what’s the next move for the “kill-the-hedge-funds” traders?

How will Wall Street react?

A major hedge fund losing money gets the attention of Wall Street. Wall Street does not want to get steamrolled on this short-squeeze game again. Many short sellers like Melvin Capital have already unwound their short positions.

Another response from dealers may be to increase option prices, particularly on out-of-the-money call options.

But many are still trying to profit from the game. “Anyone who knows anything about options is trying to figure out how to sell GME options,” said Larry McMillan, an options advisor with McMillan Advisory.

Why? “There haven’t been too many short squeezes like this in recent history.,” he said. “As long as people believe fundamentals matter, they are going to be selling short stuff like GameStop.”

He noted that with GameStop stock trading at $260 in after-hours trading Thursday night, the $260 call expiring Feb. 19 is selling for $107, which means it would have to be above $367 to make money. The put at the same strike price is selling for $150, so it would have to go below $110 to make money.

“The issue, is how to do this without leading down the road to ruin?” he said. “It’s highly risky but definitely possible.”How will trading platforms react? Online brokers like Interactive Brokers and Robinhood have put the brakes on trading in individual stock and options on many of the heavily shorted names. TD Ameritrade is raising margin requirements and preventing shorts on these names. Robinhood said the decision to restrict trading was a risk-management choice to meet “financial requirements, including SEC net capital obligations and clearinghouse deposits.” While Robinhood has faced considerable criticism from many traders for its actions, Global Markets Advisory Group’s Charles Dolan said the online brokers have significant reputational risk. “If I’m the CCO [chief compliance officer], I will be very conservative and overreact rather than underreact because it is easier to fend off an angry customer than fend off an angry regulator,” said Dolan, whose firm provides strategic advice on market structure and regulatory compliance. Robinhood said it will resume limited trading of previously restricted securities on Friday.

How will regulators and Congress react?

You know it’s a strange situation when ultraliberal Rep. Alexandria Ocasio-Cortez and archconservative Sen. Ted Cruz agree there should be hearings about Robinhood’s decision to block retail investors from trading. Rep. Maxine Waters, D-Calif., chairwoman of the House Financial Services Committee, and  Sen. Sherrod Brown, D-Ohio, incoming chairman of the Senate Banking Committee announced they intend to hold hearings.

UBS’ Art Cashin suggested that this could be a rich source of investigation: “The chat book revolt against the hedge funds might not be filled with little guys but rather some bigshots who are portraying themselves in anonymity as the little guys. Only an investigation will tell.”

It’s a far more delicate issue for regulators like the SEC, FINRA, and CFTC, which cannot easily resort to political grandstanding.

“The regulators have to be thinking, how do you remove the incentive?” said Amy Lynch, a former SEC compliance official now with Frontline Compliance.

“The exchanges could step in and limit options trading by placing position limits or other restrictions, but they would need to do an investigation on what market rules need to be changed,” she added. She noted that restrictions and even outright bans on short selling are not unheard of:  Europe instituted a short-selling ban when the pandemic started.

Nick Note: I can tell you some really big guys engineered this MANIPULATION. Posing as get rich quick millennials. They can run but they cannot hide. One of the biggest manipulations i have ever seen.  It is the high of lunacy that Funds shorted 130% of the outstanding shares. And even more than crazy but criminal that an overt manipulation using internet chat rooms and millions of piss ant trader accounts like Robin Hood and El Toro  is allowed. Short seller loses are over $100 billion and climbing. To cover these loses Funds are selling their most liquid profitable stock holdings. That is why the markets are down. Their is the most cash on the sidelines ever. So i am betting on 2 things. And I only need one of the 2 to happen to have this become a MAJOR trade. The first is the exchanges and regulators swoop in raise margins to the moon (I have seen them do this many times) and suspend short selling in the stocks involved in the squeeze play. Second is for the buy on the dip momentum players to swoop in and pick up bargans. In all the smoke many people have not noticed what an outstanding earnings season it has been so far especially for high tech stocks!

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SEC issues warning as GameStop short-selling war resumes

(Reuters) – The U.S. Securities and Exchange Commission waded into the battle between small investors and Wall Street hedge funds on Friday, warning both brokerages and the pack of social media traders that it was closely monitoring potential wrongdoing.

The week-long slugfest, pitching the little man against major financial institutions, has inflated stocks of a number of previously beaten-down companies, drawn outrage from politicians and calls for action from regulators.

It took off again on Friday as brokers including Robinhood eased some of the restrictions they had placed on trading, allowing video game store chain GameStop and headphone maker Koss Corp to jump 50% each in value.

In a rare joint statement the SEC, traditionally cautious with public pronouncements, said it was working closely with other regulators and stock exchange “to ensure that regulated entities uphold their obligations to protect investors and to identify and pursue potential wrongdoing”.

“The Commission will closely review actions taken by regulated entities that may disadvantage investors or otherwise unduly inhibit their ability to trade certain securities,” it added.

The showdown between small-time traders and professional short-sellers has also attracted the scrutiny of Congressional lawmakers, the White House, and is being probed by the New York Attorney General.

Global equity markets have also suffered as funds were forced to sell some of their best-performing stocks, including Apple Inc, to cover billions of dollars of losses.

“The (GameStop) rally will continue for as long as these trading platforms allow people to buy these stocks,” said Joe Donohue, an investor in Stocktwits, a social media platform for equity investors. “Once they shut it down — if they do — then there is going to be some selling. But until such time, the Robinhood/Reddit people are going to have their way with these stocks.”Robinhood said on its website that it was easing some restrictions, but still not allowing purchases of fractional shares in GameStop and 12 other companies, effectively meaning smaller investors have to bet more in order to buy in further to the trade. The brokerage, which has said its hand was forced by the surge in market volatility, was also maintaining numerical limits on the number of shares any one account could hold in each of the companies, further hampering players with existing positions from betting on more gains. In one victory for the retail pack, short-seller Andrew Left, who runs Citron Research and sparked the slugfest with his call against GameStop, said in a YouTube video that his company would no longer publish short-selling research. Facebook Inc took down a popular Wall Street discussion group, Robinhood Stock Traders, in a move its founder said was an unjustified response to the market moves. On Reddit forum WallStreetBets, whose almost 6 million members are seen as having driven the rallies, GameStop and AMC remained overwhelmingly favored stocks.

J.P. Morgan has named 45 stocks that may be susceptible to similar “fragility events” in days to come, including real estate company Macerich Co, restaurant chain Cheesecake Factory Inc, and clothing subscription service Stitch Fix Inc.

Like GameStop, AMC and American Airlines Group Inc all have high “short” interest ratios, making them subject to a squeeze on funds that have bet on the shares falling. The retail frenzy also appeared to spread into other asset classes on Friday, with Bitcoin jumping as much as 14% to a two-week high after Tesla Inc chief Elon Musk tagged the cryptocurrency in his Twitter biography. A tweet from Musk, who has a record of making market-moving comments on the site, had fueled a 50% surge in GameStop shares on Tuesday. Robinhood said on Friday it had also temporarily disabled a feature on its app that allows users to buy crypto securities instantly. The chief executive of the London Stock Exchange, David Schwimmer, said regulators needed to be mindful of when the line was crossed into market manipulation. “We’ve seen disruption by new technology and social media in a number of other industries so in some ways it’s not surprising to see it in financial markets,” he said. “I will let the regulators determine whether there’s a need to take a careful look at this if it moves into the realm of market manipulation ,” Schwimmer added. Robinhood has been one of the hottest venues in the retail-trading frenzy but its sudden curbs on buying set off a raft of online protests as the firm tapped credit lines to ensure it could continue trading. The brokerage also said it had raised more than $1 billion from its existing investors, having been strained by the high volumes and volatility of trading this week. A website on the short squeeze strategy set up by one WallStreetBets participant, http://isthesqueezesquoze.com/, told traders with Robinhood accounts to “find a new broker asap,” listing rivals Vanguard, Ameritrade, and Fidelity. Both Ameritrade and Charles Schwab placed some restrictions on trade on Thursday. Fidelity says it has not limited trading in the stocks. Venture capital investor Chamath Palihapitiya named SoFi, CashApp, and Public as alternatives to Robinhood in a tweet late on Thursday. Palihapitiya is planning to take SoFi public through a reverse merger in Social Capital Hedosophia Holdings Corp V.

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SEC: Manipulative trading must be avoided

https://youtu.be/Lo_CzRMbc2Q

(Bloomberg) — The U.S. Securities and Exchange Commission, facing intense pressure to respond to the recent mania in the stock market, said it’s seeking to identify potential misconduct and will scrutinize brokerages’ decisions to halt buying that triggered a retail-investor revolt.

“The commission is working closely with our regulatory partners, both across the government and at Finra and other self-regulatory organizations, including the stock exchanges, to ensure that regulated entities uphold their obligations to protect investors and to identify and pursue potential wrongdoing,” Allison Lee, the agency’s acting chair, and its commissioners said in a Friday statement.

In its statement, the SEC leadership added that the regulator “will closely review actions taken by regulated entities that may disadvantage investors or otherwise unduly inhibit their ability to trade certain securities.” The remarks were the most aggressive yet from Wall Street’s top regulator following a week-long frenzy that has seen small-time investors harness social media to drive up GameStop Corp., AMC Entertainment Holdings Inc. and other stocks, hedge funds get crushed by their short bets and Robinhood Markets and other brokerages restrict trading in the inflated securities. The tumult has shaken the finance industry and prompted demands from both Capitol Hill Democrats and Republicans for the SEC to take action. The outrage reached a fever pitch Thursday, with lawmakers expressing indignation that investors were prevented from adding to their bullish GameStop positions. Many said they suspected the move was done to help hedge funds, a claim that brokerages rejected. Robinhood has been at the center of much of the tumult, as it’s been the preferred platform to trade for the army of investors who’ve banded together on Reddit message boards to hype up GameStop and AMC. Robinhood temporarily restricted the buying of those shares Thursday, infuriating many of its customers. It also sought more than $1 billion in additional cash after the stock market’s main clearing hub demanded large sums of collateral from brokerages. The highly-complex nature of the stock market and the lengthy process for writing new rules means any SEC regulatory changes are likely a ways off.

Still, the agency has significant power to influence market behavior by opening investigations, fining or banning those accused of wrongdoing and using the bully pulpit to issue warnings — as it did Friday.

In pursuing possible manipulation of stock prices, the SEC said it’s focus would be on protecting “retail investors.” It cautioned that market participants “should be careful to avoid” illicit schemes. Some of the most common are “pump-and-dumps,” in which traders entice others to buy and then dump their shares at the inflated price. Still, such cases can be hard for the SEC to prove because they typically hinge on the agency showing that investors knowingly spread false information to dupe others into purchasing or selling a stock.