By Pam Martens and Russ Martens: February 9, 2021 ~ Yesterday, reporters at the Washington Post provided important new information about the insidious machinations of high frequency traders’ efforts to rig U.S. markets in their favor. WaPo reporters Douglas MacMillan and Yeganeh Torbati revealed the following: “Hedge funds have started to build algorithms or hire outside firms that specialize in scanning conversations on Reddit and Twitter for clues about what retail traders are thinking. Several of these services, with names like Swaggy Stocks, Robintrack and Quiver Quantitative, popped up in the past two years… “Last year, prominent hedge funds including Point72, D.E. Shaw, Two Sigma and Capital Fund Management were all found to be siphoning trading data from a popular app called Robintrack, which collected information on which stocks users of Robinhood bought and sold. Casey Primozic, the programmer who created the now-defunct app, tweeted his finding in May that he had … Continue reading →

By Pam Martens and Russ Martens: February 8, 2021 ~ There’s an important debate going on about whether the Reddit message board known as WallStreetBets fanned the short squeeze that inflated GameStop from an $18.84 stock on December 31 of last year to a $483 stock intraday on January 28 – a breathtaking run of 2,465 percent in four weeks. Last week GameStop came plunging back to earth, closing the week at $63.77. Similar short squeezes are causing other targeted stocks to whipsaw in wild trading action. The House Financial Services Committee will hold a hearing on the matter on February 18 and multiple investigations are underway by both federal and state authorities. At this time one year ago, the Reddit WallStreetBets’ message board had 900,000 users — not a particularly big number for a group that started in 2012. This morning, as a result of all the publicity, the … Continue reading →

By Pam Martens and Russ Martens: February 5, 2021 ~ Remember that LifeLock tv commercial where masked bank robbers storm into a bank, smashing things with a baseball bat and screaming, “on the floor.” As the customers hit the floor, a security guard is still standing looking calmly at the robbers with his hands at his side. A woman looks up from the floor at the guard and whispers to him: “Do something.” His reply: “Oh, I’m not a security guard, I’m a security monitor. I only notify people if there’s a robbery.” After a few seconds of observing the scene around him, he looks back down at the woman and says: “There’s a robbery.” The commercial ends with the voice over: “Why monitor a problem if you don’t fix it?” This commercial perfectly reflects the attitude of the Securities and Exchange Commission under the past two SEC Chairs, Mary … Continue reading →

By Pam Martens and Russ Martens: February 4, 2021 ~ Since 2000, the Securities and Exchange Commission has required brokerage firms to file a quarterly report showing where they are routing their stock trades for execution. The filing is known as a 606 report after Rule 606 of Regulation NMS (National Market System). Because so many traders at Reddit’s WallStreetBets’ message board have focused on the fact that billionaire Ken Griffin’s Citadel Securities was executing the majority of trades for Robinhood, the trading app where a lot of the Redditors directed their GameStop trades, we decided to take a look at what other online brokers might have also been directing GameStop trades to Citadel Securities. According to the 606 reports for the fourth quarter of 2020 for the following nine online brokers, Citadel was providing payment-for-order-flow (giving a cash rebate for trade orders directed to it) to each of the … Continue reading →

By Pam Martens and Russ Martens: February 3, 2021 ~ There is recent evidence that the U.S. is already seeing capital flight. According to a January 24 report from the United Nations Conference on Trade and Development, China beat out the U.S. in foreign direct investment inflows last year, receiving $163 billion versus $134 billion for the U.S. That was a radical change from 2019 when the U.S. received $251 billion in foreign direct investment versus $140 billion for China. Capital flight could accelerate this year if the craziness in Congress and Wall Street continues. Just ask yourself this, would you want to invest in a country that had scenes of a bloody attempted coup of the government featured on the front pages of newspapers around the world? Would you want to risk your savings in a stock market that has ceased to perform its two key functions: a pricing … Continue reading →

By Pam Martens and Russ Martens: February 2, 2021 ~ Politico reported yesterday that the House Financial Services Committee plans to call Vlad Tenev to testify on February 18. That’s the CEO of the online trading app known as Robinhood that has played a role in the controversy surrounding the bull raid (now turned bear raid) in the shares of GameStop. If that’s to be the only witness, you might as well call Ken Griffin’s personal shopper to testify. Griffin is the billionaire founder, CEO and majority owner of Citadel, which has been operating in the GameStop saga like a maestro from an orchestra pit. (For our previous profile of Griffin and Citadel, see here.) As Melvin Capital, a major short seller in the shares of GameStop was about to collapse as the stock soared, Griffin and Citadel’s hedge fund rode to the rescue, injecting $2 billion in cash into Melvin … Continue reading →

By Pam Martens and Russ Martens: February 1, 2021 ~ When it comes to the shares of GameStop, most of the mainstream media’s focus has been on the Reddit message board commentators who stood to make millions of dollars from boosting the stock price. It’s a good bet that the SEC, FBI, Financial Stability Oversight Council, Senate and House investigators are setting their sights on those who stood to make…not millions but billions. The overarching question will be: did any of the big players engage in a direct role on Reddit or incentivize the people posting on the Reddit message board, WallStreetBets, to hawk the shares of GameStop. It’s very clear from the volume of trading in GameStop that amateur traders are not the major movers of this stock. The stock has gone from trading less than 13 million shares a day in November to over 150 million shares per … Continue reading →

By Pam Martens and Russ Martens: January 30, 2021 ~ Yesterday evening, CNN’s Erin Burnett told millions of viewers that it was “amateur traders” who had taken on the powerful Wall Street hedge funds to pump up the share price of GameStop. The New York Post also called Keith Gill, the man who initiated the frenzy in GameStop shares, an “amateur investor.” This characterization of Gill fits with the broader mainstream media narrative that this is an exciting David versus Goliath story. Unfortunately, the facts keep getting in the way of that narrative. Wall Street On Parade has confirmed that Keith Patrick Gill, a man holding highly sophisticated licenses to trade and supervise others on Wall Street, is the same man using multiple identities to promote GameStop on social media platforms. Gill, and a member of his family, have confirmed to other media outlets that Gill used the identity of … Continue reading →

By Pam Martens: January 29, 2021 ~ The Wall Street Journal has an article up naming Keith Gill as the fellow that started the GameStop mania at WallStreetBets. The article says that Gill “until recently worked in marketing for Massachusetts Mutual Life Insurance Co.” According to FINRA’s BrokerCheck, a Keith Patrick Gill, employed at a subsidiary of Massachusetts Mutual, MML Investor Services, has held trading licenses since 2012 and got his Series 7 stock trading license in 2016. On November 1, 2016, FINRA shows that Gill received his Series 24 Principal’s license, making him eligible to supervise other licensed brokers. FINRA also shows that Gill has worked for three trading houses since 2012. Could there be two Keith Gills working for MassMutual? Yes there could. But it would certainly behoove the Wall Street Journal reporters to revisit their reporting. If the guy who started the GameStop mania has passed a multitude … Continue reading →

By Pam Martens and Russ Martens: January 29, 2021 ~ According to JPMorgan Chase’s 13F filings with the Securities and Exchange Commission, it moved from a net short position in GameStop shares as of December 31, 2019 to a big long position as of September 30, 2020, the date of its last 13F filing. As of the end of the third quarter of last year, JPMorgan Chase was long (owned) 368,196 shares of GameStop versus a put (short position) on a meager 19,300 shares. At the close of trading on September 30, 2020, GameStop was a $10.20 stock, making JPMorgan’s long position worth $3.8 million. At the intraday high yesterday, GameStop was a $483 stock. If JPMorgan had sold at the top, it would have made approximately $174 million on its long position versus where it was trading four months earlier. We’re dismissing what happened to the put that JPMorgan … Continue reading →