Why is the SEC acting now

#WallStreetBets: SEC is now looking for fraudulent social media posts

Was it just a movement that came together via Reddit and social media and then invested in shares in GameStop, AMC or BlackBerry? Or was it purposefully placed disinformation aimed at a coordinated short squeeze attack on certain stocks? This question is now also preoccupying the US Securities and Exchange Commission, as Bloomberg reports with reference to persons with appropriate knowledge.

So far, observers have assumed that #WallStreetBets is a loose online community that encourages each other to buy GME or AMC shares. Now it is floating in the room that it is possibly an "acting in concert", that investors have mixed with the crowd and have purposefully driven the purchase of GME, AMC and Co.

WallStreetBets: "For professionals that would be the direct route to jail"

The media are also increasingly reporting that there have been more bot activities on Reddit - for example around the call for the #SilverSqueeze - i.e. inciting people to buy the precious metal silver. According to a Reddit spokesman, there would have been a "large amount" of such postings that had been blocked by an automated moderation system. But it is also clear that it will be difficult to prove abuse or fraud. Posting on an online forum that you believe a stock may go off is not prohibited. In addition, Reddit or Twitter users are mostly on the move under a pseudonym, clearly assigning a profile to a person is not always easy.

Hedge funds on the winning side

“The minds behind this strategy are of course experienced investors and quasi-professional day traders who use the followers of financial forums such as WallStreetBets as the ideal herd animals for their really smart strategy. It would also be extremely dangerous for a professional investor who is registered with the SEC to take part here, because the goal of market manipulation is openly proclaimed, and front running of the leaders in their own ranks is accepted as their predictor. For professionals that would be the direct route to jail, ”said Karin Kisling, CEO of the online investment advisor Savity from Austria, in an interview with Trending Topics.

The short squeeze it triggered has cost hedge funds that bet on falling GME stocks many billions of dollars. It has also become known that there are several hedge funds that have made a lot of money in GME or AMC shares in the course of the #WallStreetBets campaigns. The New York-based hedge fund Senvest Management LLC, led by Richard Mashaal and Brian Gonick, earned around $ 700 million from GME shares. The fund invested long before GME's share price was catapulted higher.

Bad News 4 #WallStreetbets: Hedge Funds Made $ 700M at GameStop