There is a lot of talk lately on Twitter and Reddit about AMC’s withdrawal Tuesday of an obscure SEC form called an S-3. Form S-3 is a filing that registers securities. In this case, the securities were convertible bonds, or bonds that can convert into stock when the holder chooses.
Many on social media conclude that this withdrawal is somehow part of a plan by AMC to kneecap short sellers. I’m not quite clear on how that would work, but removing the possibility of a lot of new share issuance does keep a tighter market in the shares, making a short squeeze somewhat more likely.
But I think the key part of the S-3 withdrawal is this:
The Registrant confirms that no securities have been issued or sold under the Registration Statement.
It appears to me that AMC is simply withdrawing an SEC filing that no longer reflected reality, thus keeping their regulatory filings current. They didn’t issue shares under the agreement, so
the shares couldn’t have been sold short. In all, there doesn’t seem to be a clear connection between the withdrawal of the S-3 and short selling in AMC.
This excellent video explains the situation well:
I won’t pretend to be an expert on S-3’s. Is it possible I’m missing something? Absolutely, and I’m curious to hear your perspective in the comments at the bottom of the page.
That said, we don’t need to draw any conclusion from the S-3 withdrawal to have strong evidence of illegal activity by short sellers in AMC. As I covered yesterday, repeated fail-to-delivers in a heavily traded stock like this, along with serious short interest, powerfully suggest illegal naked short selling.
Whatever the S-3 means, there’s more than enough evidence of misconduct already.
More on AMC:
(Full disclosure: I don’t have and have never had any position in any AMC securities, long or short. I just find the phenomenon of a 28-fold increase in a stock in 6 months interesting as an investor.)
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