Two days ago, REDPILLED Media reprinted a compelling theory from r/wsb alleging that are millions of counterfeit shares of GameStop currently on the market. Now, following the release of market data from the first half of January, we have updated information concerning the blatant securities fraud running rampant on Wall Street since the GME stock surge.
From our original reporting:
Cross-posted from r/WallStreetBets
I have been following GME since mid-September and over that time I have banked myself a %1300 return in the process. However, the whole time I was a little puzzled with how severe the reactions from Wall Street have been, especially this week. “The company had more than 100% of its stock sold short! That’s never happened before!”, you say. I know, I know, but that’s not actually not a new thing. A short squeeze, even one of this magnitude, should have squoze by now with GME up more than 10x in the span of weeks. Something is just not right. I think there is something much, much bigger going on here. Something big enough to blow up the entire financial system.
Here is my hypothesis: I think the hedge funds, clearing houses, and DTC executed a coordinated effort to put Game Stop out of business by conspiring to create a gargantuan number of counterfeit shares of GME, possibly 100-200% or more of the shares originally issued by Game Stop. In the process, they may have accidentally created a bomb that could blow up the entire system as we know it and we’re seeing their efforts to cover this up unfold now. What is that bomb? I believe retail investors may hold more than 100% of GME (not just 100% of the float, more than 100% of the actual company). This would be definitive proof of illegal activity at the highest levels of the financial system.
For you to follow this argument, you need to go read the white paper “Counterfeiting Stock 2.0” so you understand how the hedge funds can create fake stock out of thin air and disguise it so it looks like real shares. They use these fake shares in short attacks to drive the price of a company down until they put them into bankruptcy. This practice seems to be widespread among hedge funds that go short. There is even a term for it, “strategic fails–to–deliver.” Counterfeiting shares is extremely illegal (similar level to counterfeiting money) but it’s very difficult to prove and even getting the court to approve subpoenas because of the way the financial industry has stacked the deck against investigations.
This completely explains why so many levels of the financial system seem to be actively trying to get in the way of retail investors purchasing more GME. It’s not just about a short squeeze, it’s about their firms’ very existence and their own personal freedom. We have the opportunity to put all these people in jail by proving that we own more than 100% of shares in existence.
There are are 71 million shares of GME that have ever been issued by the company. Institutions have reported to the SEC via 13F filings that they own more than 102,000,000 shares (including the 13% of GME stock is owned by Ryan Cohen). Now, I don’t know the delay/variance on these ownership numbers, but I think there is a pretty solid argument that close to 100% of GME is owned by these firms, if not more.
Moreover, there are now more than 7 million people subscribed to r/wallstreetbets~~. I know lots of people here are sitting on a few hundred shares that they bought back when it was under $50. Some of us are even holding thousands. If the average number of shares owned by each subscriber is even close to 5-10, we have a very good shot at also owning a similarly enormous amount of GME.~~ Even if the average was just 10 shares per legit subscriber, that puts the minimum retail position at about 30-50% of the entire company.
GME has been on the NYSE threshold list for almost a month. We don’t have January data yet, but I just analyzed the data from the SEC’s fails–to–deliver list for December (all 65,871 lines of it) and looked up the number of shares that were likely counterfeit. For comparison, I did the same for a couple random tickers. Most companies have close to no shares not show up. Of those that do, it’s a relatively small number of shares. For example, two random companies: Lowes ($LOW, ~$125B market cap) had 13,960 shares fail to be delivered at its highest point that month, Boston Beer Company ($SAM, $11.5B market cap) had 295 shares fail to be delivered.
How many shares of GME failed to deliver? 1,787,191. As the white papers points out, the true number of counterfeit shares can be 20x this number. How bad do you think that number will be when we get the numbers for January? I’m willing to bet its many times that. Look at how that compares to other companies’ stock:
I think this explains all the shenanigans going on the last few days. There is way too much counterfeit GME stock out there and DTC, the clearing houses, and the hedge funds are all in on it. That’s why there has been such a coordinated effort to disrupt our ability to buy shares. No real shares can be found and it’s about to cause the system to fall apart.
TLDR; We probably own way more of GME than we think and that is freaking out Wall Street because it could prove they’ve been up to some extremely illegal stuff and the whole system could implode as a result.
Disclaimer: I’m just a starving engineering PhD student and I don’t work in finance. I have no inside knowledge of how the financial system works and I may be wrong on some of this. This is not financial advice and you shouldn’t trade based on it. I am book-smart but I still eat crayons like the rest of you. Obligatory rocket: 🚀
Cross-posted from r/WallStreetBets
TLDR; Melvin and gang hasn’t covered anything. They’ve been illegally “closing out” their short positions and if we hold they will 100% get screwed. There are far more nefarious things at play.
So this morning I saw the S3 and Ortex data both report significant covering of short positions for GME. This absolutely threw me for a loop because Friday morning they reported above ~120% short interest still. I could not for the life of me figure out how someone could close >50% of short positions on such a tightly held stock in ONE day with very little trading volume in the week. This got me digging around to figure out what’s up.
I started by looking into GME failed to delivers (i.e. short sellers not able to cover their position on a stock) for the first half of January and I was shocked to find that just in the first 15 days of Jan, GME had ~1.2 MILLION failed to delivers. This is before most of wsb or mainstream began buying.
What was interesting though, is that of that ~1.2million, ~700K shares were covered in chunks throughout the two week period. I dug further back into the SEC failed to deliver reports for GME and saw that pattern extending back months. It seemed almost as if the short positions were just being kicked down the road.
Having spent some time looking at the pattern, it’s clear a large amount of failed to delivers come in, then a small chunk of coverage, then another large amount, and so on. To me this looked shady af so I looking into reasons that could cause that and discovered this article.
In it, a specific section is eerily similar to what we’ve experienced with GME:
Assuming that XYZ (e.g. GME) is a hard to borrow security (e.g. apes holding strong), and that Trader A (Melvin), or its broker-dealer, is unable (apes again) to borrow shares to make delivery on the short sale of actual shares, the short sale may result in a fail to deliver position at Trader A’s clearing firm. Rather than paying the borrowing fee on the shares to make delivery, or unwinding the position by purchasing the shares in the market, Trader A might next enter into a trade that gives the appearance of satisfying the broker-dealer’s close-out requirement, but in reality allows Trader A to maintain its short position without ever delivering on the short sale. Most often, this is done through the use of a buy-write trade, but may also be done as a married put and may incorporate the use of short term FLEX options. These trades are commonly referred to as “reset transactions,” in that they have the effect of resetting the time that the broker-dealer must purchase or borrow the stock to close-out a fail. The transactions could be designed solely to give the appearance of delivering the shares, when in reality the trader has no intention of meeting his delivery obligations. Such transactions were alleged by the Commission to be sham transactions in recent enforcement cases. Such transactions between traders or any market participants have also been found to constitute a violation of a clearing firm’s responsibility to close out a failure to deliver.
It’s almost like a play by play of what we’ve seen (in combination with the ladder attacks). My guess is we’ll find out more when the failed to deliver report for the second half of Jan comes out on the 17th.
Cross-posted from r/WallStreetBets
There are likely several million new synthetic longs of $GME, diluting the market, that were created on 01/28/21.
They were created by a market maker (or possibly several market makers) to stop the beginning of a short squeeze that would have bankrupted hedge funds if a margin call hit them, which ultimately could have financially impacted those market makers once liability for the shares was transferred. These shares weren’t borrowed from anyone. They’re imaginary. Pure fiction. A promise only a handful of entities can make.
The reason they did this was to buy time to save their own behinds. The reason they were allowed to do this is because regulations let them.
The creators of those shares have 21 days to deliver. Until then, they aren’t paying interest. There isn’t a public record of their creation — the closest insight we have to the number of synthetic longs in existence for $GME are the failure-to-deliver numbers, and $GME is a major outlier in that field. A terrifying outlier.
We aren’t bleeding out a hedge fund by holding. Melvin very likely is out of their position after losing half of their fund. There aren’t ‘new shorts replacing the old’. Instead, a buffer of imaginary stock was created by a market maker to ‘flatten the curve’ when a massive number of shorts had to cover once retail buyers started rushing in.
That’s why you aren’t seeing short interest increase even though there aren’t any short shares left to borrow.
These jerks are praying that in the next month, retail buyers get scared, bored, or distracted. They’re spreading FUD, attacking with short ladders, hoping you watch the short interest drop and think it’s over. They’re counting on you to sell your $GME at a bargain rate so you can pay rent, because they think you’re just retail scum betting on a garbage company, and they’ve been playing this game longer than you’ve been alive.
They’re also counting on you to obsess over things you can measure that they can hide. They want you to set rules and limits on when you’re going to run away.
Simultaneous to the creation of these synthetic longs, DTCC increased collateral requirements on 01/28/21 to purchase $GME to 100%.
This led smaller brokers like Robinhood to restrict trading, depressing the price, conveniently making it less expensive for market makers to recover their synthetic longs.
The people that pushed this collateral increase knew exactly what would happen, because it’s their job to know what the impact will be when they make changes like this.
DTCC openly stated they increased collateral requirements for $GME to reduce risk to their organization. DTCC recognized financial liability in this squeeze could eventually reach clearinghouses if the market makers went bankrupt. They know exactly what the failure-to-deliver numbers mean for this security.
It’s possible that DTCC created new collateral requirements in coordination with the flood of synthetic longs explicitly to make it easier to recover those shares. It is also possible these actions were taken without any coordination with market makers, because DTCC knows it could have dampened and stretched out a squeeze through this act alone.
Their strategy is to stretch out a short squeeze into a ‘long high’ they can recover from if retail shares are sold over time, since retail can’t buy them back.
And the people working at DTCC likely rationalized this was ‘the right thing to do’ — to prevent a systemic failure that could have impacted the entire stock market — because preventing systemic failures is the only reason organizations like DTCC exist.
Meanwhile, Robinhood — the smallest player in the game — is going to be grilled by Congress over this.
Did you think we were the only ones that saw a black swan event coming when we bought shares?
The root problem is there are several players in the market capable of creating new shares without paying interest, capable of restricting trading — and they all face severe financial liabilities if a squeeze happens. They want to turn the squeeze into a slow burn so the damage doesn’t hit them.
If we continue to hold, a squeeze could happen sometime around or after Feb 18th, or another market maker could create even more synthetic longs to dilute the market, passing the hot potato. This could make their problem even worse once those shares are bought and held.
This could continue for an extremely long period of time until a financial regulator steps in and forces them to buy the shares they’ve sold.
WSB is being made into a fall guy for the collapse of the market due to the creation of a massive number of preexisting synthetic longs that were bought and held. To fix it, market makers decided to make more, but their cure is also a poison they can’t stop taking.
Please share this news report with the general public before it’s too late and we can’t communicate without having our message content be approved by the federal government. We don’t have much time left.
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