E-Trade Considers Kicking Meme-Stock Leader Keith Gill Off Platform (wsj.com) 55
After growing concerned about potential stock manipulation, E*Trade is "considering telling meme-stock leader Keith Gill he can no longer use its platform," reports the Wall Street Journal, citing people familiar with the matter. Gill, known online as "Roaring Kitty," gained notoriety for his role in the 2020 meme stock frenzy, where he encouraged amateur investors to buy GameStop shares, significantly driving up the stock price and challenging hedge funds. Just hours ago, Roaring Kitty announced he bought $116 million worth of GameStop options and stocks.
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It's a big club (Score:4, Insightful)
Re:It's a big club (Score:4, Informative)
Listen to their howls of outrage, as their tactics are used against them.
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Re:It's a big club (Score:4, Insightful)
I would sue E-Trade, the NYSE, and the SEC if he gets kicked off.
Under what pretense? There is absolutely nothing which says any business has to keep a client. Attorneys get rid of troublesome clients all the time. Casinos tell some gamblers never to return. E*Trade has every right to tell this guy to go elsewhere. They're not liquidating his positions so there is no loss. All they're saying (considering) is to go somewhere else.
Re: It's a big club (Score:1)
Etrade wants to ban roaring kitty because he's taking the robber barons easy money and trying to bankrupt them.
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Honestly don't understand. I'm not part of the wall street bet culture. To me it looks like this:
1 dude has a lot of followers.
2 dude gets them to buy a lot of gamestop
3 dude sells his shares in gamestop and makes a lot of money from his followers.
4 some of his followers also make money selling at the right time, a lot of others lose a lot of money. When a stock goes up 100x its actual market value it will have to go down to 1x its actual market value eventually. The people who bought the stock at > 1 it
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Without short sellers to get cornered/squeezed the hedge funds won't join in on the fun with plausible deniability ("our sentiment and momentum algorithms thought it was a good idea, pinky promise"). The short selling game is creating the opportunity, regardless if short selling itself is used for manipulation.
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The short version is that a few people made big money from Gamestop meme stocks, but their success was rapidly turned into a grift where the grifter uses the lure of another meme stock bonanza to boost their own portfolio. That is illegal in many places.
It's become another cult now, with grand predictions of bankrupting the US government and other such nonsense. True believers just waiting for the next, even bigger meme stock, that upends the entire market. They demand paper share certificates because they
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This guy buys a stock then colludes with other buyers to inflate the stock price and sell it while inflated. He doesn't have news or facts to back up his buy. This is stock manipulation and it is illegal. Just because he does it very publicly doesn't make it legal manipulation; the SEC simply has no teeth.
As they say (Score:3, Interesting)
Don't hate the player, hate the game.
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It's not a game though, no matter how much the Reddit amateur vigilantes like to think it is. Gamestop is vastly overvalued and they know it.
Re:As they say (Score:4, Interesting)
They were able to sell that much stock because it's pumped. It's like a huge loan. If they can invest it wisely, it'll work out. If they can't, buh-bye. This dude has done a great job depicting himself as the little guy's champion but it's really a big pump that just hasn't dumped yet. Always has been, probably always will be unless management pulls the rabbit out.
Disclosure: no positions long or short in $GME. Not financial advice.
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So GameStop is taking monetary lessons from the US FED and the US Federal Government by printing & selling even more shares?
More shares in circulation does not increase the real value of a company. It simply deflates the real value of the shares in circulation, like the US Dollar.
More & more shares chasing something of a much smaller and finite value? What could go wrong?
As for the "game playing" ... we should ask GameStop what is their true motivation making a move like this. Perhaps they are just
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More shares in circulation does not increase the real value of a company.
Err, it does if those shares were bought from the company with cash!
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Some people forget that the purpose of stock is for a company to sell them -- not for finance bros to trade them to each other, much less gamble with the future prices.
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I mean, in a sense, but if you couldn't hope to sell them for more later on the stock market that would make them less appealing as an investment.
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Some people forget that the purpose of stock is for a company to sell them -- not for finance bros to trade them to each other, much less gamble with the future prices.
But that is EXACTLY what goes on in the markets nowadays. The finance bros and their trading platforms are the bulk of the trading volume today.
Seriously, there are no saints, no virgins, no noble traders in the markets. It is all about making a $$ and nothing more.
Sometimes, most of the time, making a $$ involves accepting a risk, making a bet that something will or won't happen to influence the price of what you are buying. Futures/Options contracts are all about that, so are the various put & call op
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It has always been a game, betting against short traders based on endurance rather than fundamentals isn't something reddit invented.
The safety in numbers approach to cornering made possible by social media has just made it a far easier thing to pull off. The game has changed, the steamroller got bigger ... adapt or perish.
Re: As they say (Score:5, Insightful)
If it wasn't a game then you wouldn't be allowed to sell a stock the same day you purchased it, because there is no need for that "feature" to enable investment.
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If it wasn't a game then you wouldn't be allowed to sell a stock the same day you purchased it, because there is no need for that "feature" to enable investment.
This, exactly.
There's investment, and then there's speculation. True investment builds productive businesses and results in a stable economy. Speculation - designed to build personal fortunes at the expense of healthy, viable businesses - gives us the shitty kind of economy we're currently stuck with. For whatever historical reasons, we ended up enabling the parasites.
Roaring Kitty beat those parasites at their own game, and took them down a peg or two. They're sore losers. Big surprise.
Short sellers hired some powerful attorneys (Score:1)
Re:Short sellers hired some powerful attorneys (Score:4, Insightful)
E-trade is also owned by Morgan Stanley now.
Gee, you don't think that Morgan Stanley might have an interest in this guy not screwing over their own traders on their positions from inside the house?
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This.
Think about the amount of options commissions they're going to sacrifice by telling him to GTFO. This would only make sense if they would make money somewhere else by getting rid of him.
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That would be .50 per contract minus exchange fees
He's a big player compared to little people but compared to E-trade's overall revenue his commissions don't amount to much.
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E-trade is also owned by Morgan Stanley now.
Gee, you don't think that Morgan Stanley might have an interest in this guy not screwing over their own traders on their positions from inside the house?
If you think Morgan Stanley or Roaring Kitty are strictly on one side of anything, you have no clue how the stock market works.
Neither of you make any sense. This isn't some David vs. Goliath fight, anyone can play both sides of anything at any time and often do. The Goliath here knows all the dirty tricks already, there is literally nothing a professional trader could learn from this guy, like hey, what if we pump up popular sounding stocks online, how come we ever thought of that!1exclamationone seriously
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True
This guy didn't just pump up "popular sounding stocks online". He gathered a ton of evidence to prove that hedge funds were extremely over-leveraged on shorts of Gamestop and decided to bet against the over-leveraged shorts. When he pointed this out on Reddit, many others followed w
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Stock manipulation? (Score:1)
I don't really know what this guy actually does, but if it's nothing more than telling people "I bought this stock and you should buy it too" then I can't see how that would be stock manipulation.
Stockbrokers and investment advisers do exactly that every day and nobody's telling them to stop.
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Stockbrokers and Investment Advisors are licensed
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Whereas if he's continuing to hold the stock, then that accusation won't fly. Pumping and _not_ dumping, is not illegal, and in fact it's arguable that this is the primary responsibility of the CEO of a publicly traded company.
Dump him (Score:5, Insightful)
I've spent a lot of years in this world. No experience with E-Trade. It's best to not go poking the bear (SEC). Yes, they are often toothless, but companies have better things to do than fight the SEC.
Upside: a few thousand bucks in commission plus some other, more complicated ways to make money from a client's holdings/cash/trades.
Downside: millions in potential fines and fees and legal costs, plus the bad press. The sellside has all sorts of know your client rules. E*Trade has to back all the trades made by their clients, and manage the risk.
Nothing against Roaring Kitty, but from the perspective of running a brokerage, he's way more trouble than he's worth.
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If Gill moves to a different platform, then many of his followers will switch, too, so the potential loss for E*Trade goes far beyond Gill's assets and fees. Gill was also grilled in congress, and nothing ever happened after that despite his defiant quote "... and I like the stock!" right in front of that panel, so his acts may be legal enough to keep the SEC quiet.
One conceivable reason for dumping Gill could be, that he could have different total holdings than what he posted publicly. This is moderately e
Uh oh... (Score:2)
Billionaires are circling the wagons again.
How much has ETrade changed since being absorbed i (Score:2)
Iâ(TM)ve had an E*trade account since the dot com boom, but it feels a lot less nimble in the last couple years since the Morgan Stanley acquisition.
The other half of the story (Score:4, Interesting)
The other half of the story is the proof that most of the blather about wise investments, value of a company reflected in it's stock price, etc. is just a pile of crap.
Game Stop was teetering on bankruptcy having shown no profit for some time. Then RoaringKitty got a bunch of pranksters to buy up their stock to teach some so-called "masters of the universe" a lesson in humility. Suddenly, Game Stop had renewed ability to borrow and move into new lines of business. We saw earlier this year that they turned a profit (unlike any number of high valued startups that never have).
Not because of shrewd masters of the universe calling the shots based on deep understanding of value or business. Because an internet clown played a funny.
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Not because of shrewd masters of the universe calling the shots based on deep understanding of value or business. Because an internet clown played a funny.
Actually it has little if anything to do with "deep understanding of the value or business". It's about hedge funds, and other "market makers", deliberately manipulating the market to their own advantage with naked short selling [wikipedia.org] and similar practices. As a recent Reddit post put succinctly; "It's not that Roaring Kitty is manipulating the markets, it's that he's breaking how others manipulate the markets to control prices" [reddit.com].
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The whole deep understanding blather is what the general public is told to believe. As you point out, the reality is quite different. Roaring Kitty has provided a practical example and proof.
The media has completely shirked it's responsibility by not talking about that. The public really does need to know that the house of cards that helps keep them in misery is a sham. Of course, said media is mostly owned by those same scumbags that need to be exposed.
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> Not because of shrewd masters of the universe calling the shots based on deep understanding of value or business
Indeed. At the time, the short sellers had 'borrowed' more shares than were actually in existence - clearly a ridiculous situation that any old fool can see is a distortion at best, and ought to be illegal at worst. There's no possible way that a business can have a negative value, yet this is what that situation suggests - but even still, more short sellers were lining up to take part.
The cl
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It seems they sold out at least some of their positions, and made millions from it. There's definitely a case to answer about the legality or morality of that, but this was a case of "the little guy" making money at the expense of the very, very big guy.
Certainly there's no legal case to be made. This was not a pump and dump. No claims were made that Game Stop was a great stock or that the buyers would make a lot of money.
I don't honestly know enough about the current caper to form an opinion on that.
Sophisticated versus unsophisticated players (Score:3)
Professional finance companies have massive infrastructure dedicated to trading, hiring people from top universities, building automated trading systems. Example of the infrastructure [reuters.com]:
These systems are pitted against individuals with multiple monitors and retail trading accounts, who think they can win - defeat in trading - these companies, and make money in the market. That I think is what is deceptive. While the tide is rising, it looks like retail can win, but when the tide goes out (we'd have to imagine situations where the Greenspan Put [google.com] was not put into play), retail is going to provide "exit liquidity" (profit) to everyone more sophisticated than they are.
Focusing on Roaring Kitty, a professional trader, who has been freelancing for some time, and not focusing on the rest of the infrastructure which is highly rigged it seems to me (revealed in more detail by the first GME spectacle), seems a bit rich.
"Developing..." (Score:2)
Why is Slashdot pretending it doesn't post all news 3 days late? You're not fooling anyone.