Jen Psaki's pathetic response to the Reddit Hedge Fund story and Redditors' glorious response to the SEC - UPDATES

Nick Arama
RedState
Wed, 27 Jan 2021 18:30 UTC

© AP Photo/Evan Vucci

We've been following the amazing story of what some Redditors over at the forum Wall Street Bets have been doing to hedge funds.

The Hill's Saagar Enjeti did an terrific breakdown of the story if you haven't been following it or want to see a really good analysis of what happened and why people are mesmerized by it.

"Wall Street is shook b/c multi-billionaires who reckless gambled are getting screwed...they cant stand that someone other than them is making money...it reveals how much of a sham this all is," Enjeti said.

It's pretty hard not to see the story in little guys sticking it to folks who have tried to work over the system to their own advantage and there are some amazing stories already about what they are doing with the money.

Some of the Redditors who made out were just so grateful, talking about how one would be able to pay for his sister's needed medical treatment and another who said he could now save his dog's life.

People have made and hedge fund guys have lost a tremendous amount of money over the past day. So much so there were talks about doing something to save them.

So much so that they even asked Jen Psaki about it. Jen Psaki, typically, tried to paper over a non-answer with a lot of gobbledegook.

"Is the White House concerned about the stock market activity we're seeing around GameStop and now some other stocks as well?" she was asked. "Have there been any conversations with the SEC about how to proceed?"

"Well, I'm also happy to repeat that we have the first female Treasury secretary and a team that's surrounding her and often questions about markets," Psaki answered.

Huh? That has what to do with the question? She said that their "economic team, including Secretary Yellen and others" were "monitoring the situation."

But now because the redditors screwed some powerful people with their revolution, there's talk of the SEC looking into it. But why? How is this different from what hedge fund guys do every day, but for the little guy?

Now there's talk they might try to bail out the hedge funds. Oh, the fun. Just wait until Biden tries to do that and AOC has to try to defend that move!

But the redditors had the perfect response to talk about the SEC.

Absolutely perfect!

Oh and:

Comment: For more on the WallStreetBets market shenanigans see: Video game retailer GameStop stock doubles again with no let-up in amateur interest; Update: Discord bans r/WallStreetBets outright

UPDATE 28/01/2021: Developments have come fast and furious in the battle between the Reddit group r/wallstreetbets and the hedge funds. Big Money has pulled out the big guns in an attempt to quash the peasant rebellion:

NBC reports first:

Melvin Capital closed out its short position in GameStop on Tuesday afternoon after taking a huge loss, the hedge fund's manager told CNBC's Andrew Ross Sorkin.

GameStop, hedge funds' most-hated stock, was targeted by an army of retail investors who marshaled forces against short sellers in online chat rooms. In the Reddit forum "wallstreetbets" with more than 2 million subscribers, rookie investors encouraged each other to pile into GameStop's shares and call options, creating massive short squeezes in the stock.

CNBC could not confirm the amount of losses Melvin Capital took on the short position. Citadel and Point72 have infused close to $3 billion into Gabe Plotkin's hedge fund to shore up its finances. On Wednesday's "Squawk Box," Sorkin said Plotkin told him that speculation about a bankruptcy filing is false.

Vice tells of the hammer being brought down:

According to screenshots shared on social media, on Thursday morning a notification appeared on Robinhood telling users that they could close their position on GameStop's stock but not buy any additional shares. Redditors are currently panicking, looking for ways to transfer their shares of GameStop off of Robinhood to other platforms, and are generally furious at the platform.

In a blog post, Robinhood confirmed that it has placed restrictions on several stocks due to volatility. "We continuously monitor the markets and make changes where necessary. In light of recent volatility, we are restricting transactions for certain securities to position closing only, including $AMC, $BB, $BBBY, $EXPR, $GME, $KOSS, $NAKD and $NOK. We also raised margin requirements for certain securities," the blog post read.

Robinhood did not respond to a request for comment.

Motherboard was unable to place orders to purchase shares or fractional shares of GameStop, AMC, BlackBerry, or Nokia in pre-market trading on the RobinHood app. We were able to buy a stock we picked randomly — something called SRNE — with no problem. "This stock is not supported on Robinhood," a message reads when we tried to purchase GME. Searches for "GameStop" and "GME" on the app itself no longer return any results.

This is likely to have a massive impact on Robinhood users and ultimately the company. Holders are now unable to freely trade it; the app is only allowing users to close out their positions, meaning they can sell it but not buy more. This is potentially devastating for novice investors or those who simply want to follow the general marching orders of the r/WallStreetBets subreddit, which is to hold (and buy more) GameStop stock until further notice.

ZeroHedge reports of lawsuits being filed against Robinhood by angry customers for blocking any trading of Gamestop besides selling, along with other updates:

Robinhood Reportedly Selling People's GME Positions Without Warning, Investors Sue

Update 1445 EST: Users are starting to report that Robinhood is selling their GME shares without warning. Screenshots like the one below are starting to make their rounds on social media. Meanwhile, platforms like Webull and Merrill Edge have also joined in the restrictions.

Update 1232 EST: Following the outrage of stock manipulation from AOC, Brendon Nelson (presumably a Robinhood user), sued Robinhood Financial LLC, Robinhood Securities, LLC, and Robinhood Markets, Inc. in the Southern District of New York this afternoon for "removing Gamestop from its trading platform."

The lawsuit reads:

"Robinhood purposefully, willfully, and knowingly removing the stock "GME" from its trading platform in the midst of an unprecedented stock rise thereby deprived retail investors of the ability to invest in the open-market and manipulating the open-market."

Social media users on Twitter were infuriated by the trade restrictions Robinhood and other discount brokerages placed on clients this morning. Some said:

"Does this suit mention Robinhood's relationship with Citadel, who are deeply interested in the shorting of GME?" someone else said.

Meanwhile, Barstool Sports' Dave Portnoy said he's down a "milly," (we believe that's a reference to $1MM) following the trade restrictions placed by Robinhood and other discount brokerages. He called Robinhood trading app "crooks" and started calling out executives on Twitter.

Portnoy still thinks "$amc and $nok come back the second the free markets open again."

Portnoy had this message to the founder of Robinhood:

Even rapper Ja Rule chimed into the discussion about the corruption on Wall Street. He said, "They hedge fund guy shorted these stocks now we can't buy them ppl start selling out of fear... we lose money they make money on the short... THIS IS A FUCKING CRIME!!!"

And that's coming from the guy who helped organize Fyre Fest.

* * *

Update 1141 EST: Robinhood is reportedly adding more names to its restricted list, including American Airlines, which was up more than 70% at one point in pre-market trading this morning.

ROBINHOOD ADDS AAL, CTRM, SNDL, OTHERS TO RESTRICTED TRADING

Additionally, it looks as though the first of what is likely to be many lawsuits has been filed against Robinhood. We wonder if Citadel has a good lawyer they can recommend?

ROBINHOOD CUSTOMER SUES OVER REMOVAL OF GAMESTOP

Update 1103 EST: Everyone seems to be piling on Robinhood, including hip hop artist and Fyre Festival bankroller Ja Rule, who says "this is a fucking CRIME" about the measures Robinhood is taking.

Update 1017 EST: Bloomberg is reporting that the SEC and Fed will likely take "little action" over the trading in GameStop and other names - but that it may include a trading suspension in the names.

Analysts told BBG: "We do not believe the SEC will issue an emergency order nor will the Fed change margin requirements. The only possible action that will potentially be taken is the SEC suspending trading in one or more of the names for one to two business days"

Update 0950 EST: Robinhood (once again) appears to be down. There's no word on whether the disruption is just from the volatility or whether or not it is directly related to the platform's ban of buying certain equities:

ROBINHOOD SAYS ISSUES WITH EQUITIES, OPTIONS, CRYPTO TRADING
ROBINHOOD SAYS DISRUPTION WITH IOS, ANDROID AND WEB APP
ROBINHOOD SAYS EXPERIENCING SERVICE DISRUPTION

Update 0925 EST: Interactive Brokers has joined Robinhood and has put option trading in some names into liquidation. This headline crossed the terminal around 0925EST:

INTERACTIVE BROKERS PUTS SOME OPTION TRADING INTO LIQUIDATION

In a statement to CNBC, IB said:

"As of midday yesterday, (1/27/2021) Interactive Brokers has put AMC, BB, EXPR, GME, and KOSS option trading into liquidation only due to the extraordinary volatility in the markets. In addition, long stock positions will require 100% margin and short stock positions will require 300% margin until further notice. We do not believe this situation will subside until the exchanges and regulators halt or put certain symbols into liquidation only. We will continue to monitor market conditions and may add or remove symbols as may be warranted."

Additionally, Robinhood has released the following statement:

"We continuously monitor the markets and make changes where necessary. In light of recent volatility, we are restricting transactions for certain securities to position closing only, including $AMC, $BB, $BBBY, $EXPR, $GME, $KOSS, $NAKD and $NOK. We also raised margin requirements for certain securities."

We can't help but wonder...

Update 0842 EST: Barstool Sports' Dave Portnoy has weighed in on the restriction, stating "Either @RobinhoodApp allows free trading or it's the end of Robinhood. Period."

He has also Tweeted: "And it turns out @RobinhoodApp is the biggest frauds of them all. "Democratizing finance for all" except when we manipulate the market cause too many ordinary people are getting rich."

He continued: "Somebody is going to have to explain to me in what world [Robinhood] and others literally trying to force a crash by closing the open market is fair? They should all be in jail."

--

One day after TD Ameritrade implemented unprecedented restrictions on trading in GME, AMC and other massive short squeezes, on Thursday morning reports are circulating on social media that Robinhood is no longer allowing GameStop or AMC share purchases.

"Robinhood Removes GameStop, AMC; Puts Notice On Pages Saying 'You Can Close Out Your Position On This Stock, But You Can Not Purchase Additional Shares'," Benzinga reported at about 0830 EST.

The report was corroborated by additional sources shortly after 0830 EST.

Users are reporting the same on Twitter.

There are also scattered reports that the app has restricted BlackBerry. Users on social media are furious:

Developing...

Social media users continued to share information and vent their anger:

One purported Robinhood insider claimed the White House was getting involved:

Click for larger image:

© Odin19199