I just don't understand how a bunch of people on reddit could figure out this mass amounts of naked shorts existed on GME and the SEC is supposed to somehow be blind to it. Like I get that the SEC isn't going to do anything but how are they going to try and justify that they're not doing anything?
Obviously, but how are they going to pretend they were? We all know the institutions are fraudulent but it's still their job to pretend that they aren't
I saw someone
on Naked Capitalism of all places trying to justify the situation (claiming that it’s possible a stock can be shorted to 140% but that it doesn’t have to be naked shorting), saying:
There are 100 shares. A owns 90 of them, B owns 10. A lends her 90 shares to C, who shorts them all to D. Now A owns 90 shares, B owns 10 and D owns 90—there are 100 shares outstanding, but 190 shares show up on ownership lists. (The accounts balance because C owes 90 shares to A, giving C, in a sense, negative 90 shares.) Short interest is 90 shares out of 100 outstanding. Now D lends her 90 shares to E, who shorts them all to F. Now A owns 90, B 10, D 90 and F 90, for a total of 280 shares. Short interest is 180 shares out of 100 outstanding. No problem! No big deal! You can just keep re-borrowing the shares. F can lend them to G! It’s fine
I haven’t even tried to parse it; it’s the stupidest wall of text I’ve ever seen in my life. If this is your defense that the market is fine and that it’s actually some tendie-lovers from reddit who are the ones causing a disruption, I dunno what to tell ya.
This came from the comments, but for some reason NC posted this person’s defense of the market as a post.
Here's the explanation of that argument I posted a few weeks ago:
🐒 owns a 🍌. 🐍 borrows that 🍌to sell to 🦧. 🐍 wants to borrow another 🍌to sell to 🦍, but 🐒 doesn’t have any more, so they borrow it from 🦧 instead.
🐒 -lend-> 🐍 -sell-> 🦧 -lend-> 🐍 -sell-> 🦍
If that one 🍌is the only one that exists, 200% of 🍌have been shorted. 🐍 now makes double what they would have if the price goes down. 🐒 and 🦧 make money if the price goes up, but also make money from interest lending to 🐍.
But the only way the price goes down in this market is if both 🦧 and 🦍 are willing to sell a 🍌 to 🐍 at a lower price that what they bought a 🍌 from 🐍 at—and that’s stupid, why would they do that?
Normally there are enough market players to mask the stupidity of the whole situation, since there’s always someone around to make a bad trade and lose lots of money. 140% of shares being shorted means we’re no longer in that kind of normal.
If that were true it would still have been a complete clusterfuck, but it's probably not what happened. It was probably naked short selling, and the resolution was probably negotiated through back-channels so as to avoid blowing up the market.
I just don't understand how a bunch of people on reddit could figure out this mass amounts of naked shorts existed on GME and the SEC is supposed to somehow be blind to it. Like I get that the SEC isn't going to do anything but how are they going to try and justify that they're not doing anything?
It's simple. They weren't.
Obviously, but how are they going to pretend they were? We all know the institutions are fraudulent but it's still their job to pretend that they aren't
I saw someone on Naked Capitalism of all places trying to justify the situation (claiming that it’s possible a stock can be shorted to 140% but that it doesn’t have to be naked shorting), saying:
I haven’t even tried to parse it; it’s the stupidest wall of text I’ve ever seen in my life. If this is your defense that the market is fine and that it’s actually some tendie-lovers from reddit who are the ones causing a disruption, I dunno what to tell ya.
This came from the comments, but for some reason NC posted this person’s defense of the market as a post.
Here's the explanation of that argument I posted a few weeks ago:
If that were true it would still have been a complete clusterfuck, but it's probably not what happened. It was probably naked short selling, and the resolution was probably negotiated through back-channels so as to avoid blowing up the market.