03_Aggie said:thirdcoast said:03_Aggie said:thirdcoast said:
Brokers let shorts buy shares while banning buying of shares by everyone else. Not excusing GME speculation, but longs got cheated and shorts bailed out. Brokers should have froze ALL trading on GME until they met capital requirements. Instead they only allowed longs to sell shares to shorts. Imagine a stock crashing and brokers only allowing buying of shares while limiting all selling.....so then shorts have to buy to cover at higher price for big loss.
If they limit selling they effectively limit buying. Likewise, there's no reason for a broker to limit buying only to shorts unless they were the lenders of the securities in the first place. If that was the case then they would've been bailing themselves out, not the short sellers.
That wasn't the case. It was a trade clearing issue due to counterparty risk on short side of unlimited loss potential. By bailing out the shorts, they eliminate that counterparty risk and effectively keep themselves from holding bag when shorts can't cover at $500-1000 a share.
The shorts absolutely benefited from being the only market participants able to buy shares. It wasn't the clearing house and brokers' motive to bail shorts out, but they certainly did to protect themselves.
Andrew Sorkin of CNBC also flat out lied to public during that GME restriction on longs, and said Melvin covered, when they only really got recollatoralized. He just repeated a bogus claim probably from anonymous source, and it caused the sell off allowing shorts to cover. That same Sorkin liberal reporter then accused David Portnoy of manipulating stocks a few days later. These are the HUGE red flags everyone is overlooking, and I doubt the SEC will even look into the false Sorkin claim and who fed it to him. Instead the SEC is looking into reddit posters who collaboratively jumped on a mechanical trade.
So they bailed out the shorts that never actually closed their positions?
They began closing as the sell off ensued AFTER brokers were forced to restrict longs and AFTER Sorkin lied to public saying they already fully covered their short position. The entire reddit trade hinged on shorts still being obligated to buy, if that element goes away, it's no longer a good trade....thus the sell off right into shorts hands.
All the SEC would have to do is look at Melvin's books or short interest at the time Sorkin reported false info. I don't think Sorkin did anything nefarious, but there should still be consequences for spreading disinformation on CNBC. As far as I know the reddit guys only created a viral trade based on shorts overleveraging on a finite qty of securities. Yet they have been made the villan by the "pros" or punch line in the jokes. Everyone is overlooking how the mechanics of the rule change favored shorts and brought the price from 500 to 50 in a matter of days. It wasn't some natural bubble burst like many assume....yes, that would have happened eventually but it was induced.
If coinbase, Gemini and others all put the same restriction on Bitcoin it would go from $50k to $500 in days because of that artificial restriction on demand side. And if everyone just claimed it was a natural bubble burst they would be wrong there too.
