GameStop seems to have been regulated

RobinHood and Interactive Brokerage and other online trading platforms seem to have come up with an effective range of policy changes to at least slow the nonsense down. Of course now all the people left of center who are having fun with the Have You Tried Cutting Out the $3 Latte jokes at the expense of bankrupt hedge funds are unhappy and AOC wants an investigation. As One Does. First you are against margin shenanigans and then you are against limitations on margin shenanigans. No one will notice, least of all the person taking both sides of a regulatory argument.

The whole situation makes me a little nervous. It was _really awesome_ watching Bear Stearns fall over, but of course after that, it was not fun at all. Let’s hope this will not be similar. I don’t think it will be. But I’m wrong sometimes, and this could be the time.

ETA: Also, honestly, I think this whole thing has been about punishing Melvin for shorting Tesla. The people objecting to the limits being placed on this nonsense also hate Elon Musk. So... presumably they don’t realize?

ETAYA: Also, we need to quit calling them “retail customers”. When they start working together to orchestrate short squeezes and gamma traps, “retail customers” is excessively misleading. One alternative from Bloomberg is, “maverick, digitally oriented traders”.

ETA still more: And even if this really is just about how the casino is run, well, people get banned from casinos for a lot less than what this crowd is doing.

ETA really why: WallStreetBets tag is Like 4Chan found a bloomberg terminal, but I mean, _think_ about that. 4Chan brought us Q. Do we really want to encourage this?

Also, AMC sold a bunch of stock and a bunch of their convertible bond holders converted (why?!?), so now AMC can stay in business for longer.

Also, American Airlines seems to have been targeted.

ETA: Really, I just am never going to stop.

WSJ https://www.wsj.com/articles/gamestop-surge-tests-scope-of-secs-manipulation-rules-11611838175

Arnold and Porter attorney (SIL used to work there, so on the I Must Respect Them list) says:

““If they are all egging each other on using a social-media platform, they are effectively engaged in a crowdsourced pump-and-dump scheme,” said Daniel Hawke, a partner at Arnold & Porter Kaye Scholer LLP.”

I brought this over to my husband and he confirmed that that is almost exactly what I said. See, if I had just read this when it first hit, I would not have had to think so hard. Hawke used to run the market abuse unit at SEC — probably he knows what he is talking about. From the same article:

“ A Reddit spokeswoman said the company prohibits content that facilitates illegal transactions, and the company would “cooperate with valid law enforcement investigations or actions as needed.””

So, that’s another component.

ETA whatever: https://www.redditinc.com/policies/content-policy

Rule #7

Are we finally gonna see a 9a2 test case?

“Notwithstanding these few cases, the overall historical record shows that § 9(a)(2) has played only a minimal role in the development of manipulation jurisprudence in securities law, despite the obvious relevance of its language. The principal reason is that, until 2010, § 9(a)(2) was only applicable to alleged manipulations involving exchange traded securities. This made it inapplicable
to most open market manipulations for two reasons. First, stocks that trade on exchanges tend to be traded in large volume and be highly liquid, whereas open market manipulation is much more likely to move price significantly with more thinly traded over-the-counter stocks. So, for most of § 9(a)(2)'s history, the lower float, lower volume securities most likely to be the victim of a market manipulation were outside its reach." 7”

From: https://repository.law.umich.edu/cgi/viewcontent.cgi?article=2978&context=articles&fbclid=IwAR3a_AFbTFIX-hlVcX-rYPCDfWpcRYT8uGnk_Jw1YTweBsuO9HXHwJvFTus

This is really amazing! I think Wall Street Bets has broken 9a2! For reals! Motive is apparent! And it would have been illegal _before_ the exchange traded requirement. This is so weeeeiiiiiirrrd. The actually impossible thing has happened!

So, you know, all those people who said we did not need the law because it was self-enforcing were actually wrong.