Shield | GameStop Stocks

1. Are Gamers Gaming The Market? - Game Stop at Shield

2. IntroDuction It seemed innocent enough, at least at first. There was a group of traders eager to learn from each other communicating in an online forum, sharing tips, and offering insights. The subreddit thread, r/wallstreetbets, was rapidly gaining popularity and currently boasts nearly 8 million members. Fine, no cause for alarm there. On January 18, 2021, Joe Feldman, one of the analysts at Telsey advisory group, cut his rating to “underperform” which is code for “sell now.” GameStop, a brick- and-mortar gaming, and entertainment retail business, had seen declining sales for years, posting losses of over $600 million in 2018 and nearly $200 million in 2020.

3. collusion and market fraud It appears that Redditors are gaming the markets. They’re publicly targeting the big hedge funds as an overt way of holding them responsible for the 2008 Financial Crisis, which left countless everyday average citizens in dire financial straits but resulted in essentially no punitive action against those who perpetrated the Crisis. Now, it’s payback time and these Redditors are just getting started. It’s only Week 2 since their war on Wall Street began and they’ve already moved on from GameStop: today, they’ve started squeezing silver with #silversqueeze now trending on social media.

4. Isn’t that illegal? The masses on the subreddit thread are arguing that the shorts placed on GameStop by hedge funds were “inflated” and “artificially large.” Posing the question more narrowly, is it illegal to bankrupt a hedge fund? No, it’s not; well, not exactly. However, what it has done is put social media into the crosshairs of regulatory agencies. More on that in a moment. Using social media or whatever e-Communications channel to broadcast your intention to buy or sell stocks is legal. By inhibiting the ability to trade certain securities, brokers may be charged with aiding manipulative or abusive market schemes. And the SEC makes it very clear that doing so is illegal.

5. What About Collusion? That’s where things get more interesting. Social media and the rise of influencers coupled with increased accessibility have made it possible for communities to rally around a ringleader. Individuals can choose to become part of the collective or pursue investment independently once they get the “scoop” on which path the majority are inclined to take. And that’s the grey zone that has everyone talking. Exacerbating the complexity around the legal question of financial fraud that has been committed by the Redditors involved is the issue around identity. Most Redditors use avatars and operate online anonymously, many with untraceable accounts. Some of the Redditors involved have been revealed to be as young as 10 years old.

6. Conclusion The question is, what happens now that we know silver is the next target of this cadre of online “bandits?” Can the SEC and other agencies in regtech move swiftly enough to legalize the surveillance of social media across all channels to monitor for Collusion and to sniff for potential acts of market abuse before they happen? We’ll have to watch things closely to see how this war between the “haves” and the “have nots” plays out. For now, what we do know is that a bunch of smart teenage gamers gamed the markets to the tune of $20 billion in losses on Wall Street – and counting.

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