Is Melvin’s Gabe Plotkin Headed to Prison?

The SEC is investigating Melvin Capital Management for securities fraud. From a report that broke last night in The Wall Street Journal:

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The U.S. Securities and Exchange Commission is looking into Melvin Capital Management risk controls and investor disclosure after the hedge fund was crippled by the meme-stock rally last year, said people familiar with the matter.

The regulator has contacted investors in the hedge fund in recent months as part of an investigation into what Melvin founder Gabriel Plotkin and other senior executives told them following the meme-stock rally in January 2021 and whether it misled investors when it raised money last year.

If Plotkin and other top Melvin executives lied to investors in a fundraising presentation, they committed a very serious crime: securities fraud.

Securities fraud can be punishable by prison time, not to mention large fines. Of course, no one has proven anything yet against Plotkin or anyone at Melvin.

When Melvin raised money last year, it had already suffered massive losses. Its losses during the meme stock rally of January 2021 were $6.8 billion, or more than half its assets.

The worst days saw losses of over $1 billion. A day.

If you’re raising funds and fighting for survival in a situation like that, you might be tempted to stretch the truth.

We don’t yet know which fundraising presentations the SEC is looking into. But we do know that Melvin raised $2.75 billion last year from Citadel and Point72 Asset Management.

Did Melvin lie in those presentations in order to secure the bag?

When you rob mom and pop, it’s hard for the victim to fight back. But if you rob some of the richest and most sophisticated investors in the world, they can hire an army of lawyers to make your life very difficult.

This investigation comes on top of a DOJ probe into Melvin’s short sales. That investigation too could result in prison time for insider trading if wrongdoing is found.

In all, it’s not hard to see why Melvin shut down. It had lost a fortune, couldn’t get any more performance fees, and feds were circling.

I don’t know whether Melvin did anything wrong. But I do know that today, I’m glad I’m not Gabe Plotkin.

Do you think Melvin is guilty? Leave a comment at the bottom and let me know.

Have a great weekend everyone! 👋

More on markets:

Melvin Capital Under Federal Investigation

The Real Reasons Melvin Is Shutting Down: No Fat Fees and a Federal Investigation

AMC’s 9 Million Missing Shares

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Photo: Melvin Capital founder Gabriel Plotkin


7 thoughts on “Is Melvin’s Gabe Plotkin Headed to Prison?”

  1. All short hedge funds are quilty and not only should they all be put behind bars all there assets should be frozen so even their families should suffer because they have been living large by bankrupting companies and stealing from the retail investors for many decades. No one should feel bad for them because given the chance they would do it again. Let them know what it feels like to worry if they can make there monthly payments. They are losing big money as I write this just trying to keep the so called meme stocks from mooning. They are losing all their clients money while flying around the world stashing money in case some agencies finally decide to do there jobs.


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