In over a year reporting on this, I’ve never seen a number this big.
Fails to deliver in shares of AMC Entertainment Holdings Inc. hit nearly 9.7 million in June. The report, released today by the SEC, covers the second half of the month.
Get the blog before anyone else…subscribe!
The peak came on June 28, with 9,697,393 shares failing to clear. Fails to deliver settled at a still massive 1,907,897 at the end of the month.
So what are fails to deliver, anyway? A fail to deliver occurs when a trade is made but never completed.
Let’s say I agree to sell you 100 shares of AMC for $15.07 each. You want the shares and you’re happy with the price, so you agree.
Done deal right? Wrong.
I have to actually deliver the shares to you. When I fail to do that, that’s called a fail to deliver.
Fails to deliver often occur when traders engage in naked short selling. This generally illegal practice involves selling short shares without borrowing them first.
It’s a powerful way to push down a share’s price. If you can sell stock short without borrowing any, you can short any amount!
The market is flooded with sell orders and the share price dives. But the trades never get completed.
Instead, they show up on this report.
This is a truly incredible number of failed trades. Let’s zoom in on June 28th, the peak for fails to deliver.
Here’s how many fails to deliver some of the biggest stocks in the market had that day. This can give us an idea of what’s normal, even for far larger companies:
Alphabet Inc. (Google): 814
Apple Inc.: 28,223
Microsoft Corp.: 12,400
The biggest companies on earth have just a few trades not clearing. Meanwhile little old AMC has nearly 10 million.
Keep in mind, just because those fails to deliver dropped near the end of the month doesn’t mean the trades ever settled. The DTCC often puts trades that failed some time ago into an “obligation warehouse.”
After that, these failed trades disappear.
How can we have robust financial markets when the public doesn’t trust them? And how can the public trust markets when trades that affect share prices never actually happen?
It’s time for the SEC to investigate this issue vigorously.
Until then, we’ll just see more bogus trades pile up.
What do you think is causing these failed trades? Leave a comment at the bottom and let me know.
Have a great weekend everyone! 👋
More on markets:
Wall Street Banks Turn on Each Other as Federal Probe Looms
New Law Could Put Big Short Sellers on the Endangered Species List
Bill Ackman Loses $4.8 Billion
Get the blog before anyone else…subscribe!
If you found this post interesting, please share it on Reddit/Twitter/etc. This helps more people find the blog!
Save Money on Stuff I Use:
This platform lets me diversify my real estate investments so I’m not too exposed to any one market. I’ve invested since 2018 with great returns.
More on Fundrise in this post.
If you decide to invest in Fundrise, you can use this link to get $100 in free bonus shares!
I’ve used Misfits for years, and it never disappoints! Every fruit and vegetable is organic, super fresh, and packed with flavor!
I wrote a detailed review of Misfits here.
Use this link to sign up and you’ll save $15 on your first order.
Tremendous 
Why does this happen? When you see millions of FTDs, its usually a sign of illegal Naked Shorting. But the SEC is useless and at this point seems to be complicit by allowing such practice.
LikeLike
We must demand a full forensic audit of the DTCC.
LikeLike