Apr. 26, 2022
As an investor, citizen and tax payer of the US I’m asking you, SEC, to please do your job correctly, the rule SR-NSCC-2022-801 is nothing but a helping hand to the hedgies disguised as a way to help retail investors The Securities Exchange Commission need to apprehend those hedge funds who are over leveraging the us economy once again instead of helping them and hurting retail in the process. The rule is another way to hurt retail and help the short sellers overuse failure to delivers. They should be Margin called after failing to deliver the borrowed shares for the 100th time don’t you think?? and now this rule is supposed to help retail?? If This rule is to prevent another “liquidity crisis“ like the one in 08, you should be incarcerating the ones who caused it instead of fining them your $100k cut out of their $1B gains. This self regulation organizations don’t work. They need to be defunded and start from the beginning, all of the actions done by hedge funds are criminal! And all the SEC does is give them a slap in the wrist. Can someone explain to me the math of the fines given. How is a fine of $100k supposed to stop a hedge fund from committing crime when they make $1B in gains. The total criminal gains earned are more then the fine given for committing the crime. In case I’m not being clear please allow me to explain it slowly, with various bullet points, the events that take place (without naming any parties of course, unless you ask for proof, in which case I will because there is plenty of it, so please ask me for proof so I can show you how bad you’re doing your job): Here’s an example of how Hedge Fund A (HFA) would commit a crime, or at least in the sense of common sense that is a crime, but I’m sure your lawyers are already prepping their terminology to run circles around bad incriminating words to make it look like it’s not a crime but here goes nothing. And BTW I’m not gonna explain what shorting is, you should know that! you’re the SEC! •STEP 1: Hedge fund A (HFA) shorts $ABC stock; meaning they will borrow a stock with the promise of giving the share back to its owner at the end of the month for a fee. If the stock isn’t returned, then The true owner of the stock calls the cops (SEC) on HFA so they can reprehend them because they didn’t get their share back as promised, some might say they were robbed. But what do I know. But we’re not there yet, it’s the 1st of the month and the stock is at 10$. •STEP 2: HFA sells borrowed $ABC stock in the market and the price goes down because the market thinks the owner is selling the stock. A few days go by and the stock is now at 5$ The owner now has 2 options, buy the share back and return it to owner while pocketing the difference or he could borrow more to make more money. Here’s where step 2 comes in. •STEP 2: borrow more stocks to sell. HFA borrows as much as possible to make more money since the price is plunging. More days go by and The stock is now at 1$ HFA has no more shares to borrow. So maybe he should give back the shares back specially since it’s the end of the month. But HFA won’t, they know if the stock $ABC goes down to zero they will get to keep all the profit since the company is worth 0 dollars All they need is more stocks to borrow, but what if there are no more shares to borrow? It’s simple they create an IOU, you know.. (I owe you) and they sell those too So just imagine how many real and fake shares it must’ve taken them to bring the stock to 0. They sold shares they didn’t own, to me and to anyone who has a common sense, that is called stealing. They are getting paid for selling a piece of paper saying I owe you one. •STEP 3: Make profit. HFA has brought down the stock $ABC down to zero and can now make all that money. Without worrying about giving it back, because it’s worth $0. But right as they’re about to cash out, the SEC kicks the door down and catches them red handed. That’s right! The cops have finally caught the thieves who have been getting money by selling a piece of paper saying I owe you, I’ll give it to you later. Imagine ordering Uber eats and when you finally get it you open the bag and instead of food you see a piece of paper saying “my bad I ate it, pay you back promise” You’d call the cops and complain to Uber because you already paid for it. But only got an IOU. So, thats exactly what’s happening here in this scenario with HFA. The cops finally caught the thieves who were asking for money and giving paper promises red handed. They see that the total gains for bankrupting $ABC is $1M. So what does the SEC do? Do they take back the $1M from them? Do they give the money back? Do they jail the thieves? The answer is no, to all 3. The SEC fines the a whopping $100,000! Yup! So now the thieves are left with only $900,000!!! I feel bad for those thieves. I’m sure they learned their lesson and will never do it again after such huge loss, right? Wrong! So once again! Even slower: $1,000,000 is more than $100,000 How is a fine of $100,000 acceptable when the total amount of stolen money is now $900,000. They steal more than they are fined. Can someone please explain how this works? How is that a good idea that the SEC has been implementing??? If you pay 100k out of the 1M you stole you’re still in profit. That’s what the SEC has been doing for years. Wrist slaps to those hedge funds who have been playing with the US economy. While retail pays the price. SR-NSCC-2022-801 isn’t fooling anyone. The SEC, FINRA, DTCC, and any SRO are complicit to the clear and obvious crimes. They have been for years, but to their bad luck retail got involved, i a retail investor got involved and I’m representing myself. I’m asking my government to do their jobs and stop these thieves, I’m asking them to stop passing rules that only hurts retail and helps HFs. These crimes need to come to an end. Sent from my iPhone