Tag Archives: SEC

Over 57,000 Sign Petition to Ban Payment for Order Flow

At last count, 57,610 people have signed a petition at Change.org to ban payment for order flow. This practice involves market makers paying brokers for the chance to complete trades.

The market makers claim they complete the trade at slightly better than public market prices while still making a small profit.

At least one study indicates that payment for order flow actually does save customers money, especially considering that it removes the need for commissions. However, both Citadel Securities LLC and Robinhood Markets, Inc. have been fined for providing worse prices than public exchanges.

I favor not a ban, but more careful regulation of payment for order flow. I think the SEC should require brokers like Robinhood and market makers like Citadel to release data on a regular basis proving that they’re getting customers better prices than public exchanges.

Both companies are world class experts in data aggregation and analysis. They’re more than up to the task.

This type of regulation would allow retail traders to continue to trade commission free while also making sure they’re protected.

Meanwhile, if an investor doesn’t want their order sold to a market maker, Interactive Brokers offers such an account. But sure enough, it’s not free.

Many companies also sell investors their stock directly, no broker needed. Such a plan could be a great service for companies like AMC Entertainment Holdings, Inc. and GameStop Corp. to pursue.

So, will you be the signing petition? Let me know in the comments at the very bottom of the page.

More on markets:

Citadel Builds Huge Position in AMC Call Options

How Elrond Could Take Over Payments Worldwide

AMC May Issue Its Own Cryptocurrency, Per CEO

Photo: “Occupy Wall Street” by DoctorTongs is licensed under CC BY 2.0

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AMC’s S-3 Withdrawal: What Does It Mean?

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:

AMC ON THE THRESHOLD LIST: STRONG EVIDENCE OF NAKED SHORT SELLING

HEDGE FUNDS LOSE $12 BILLION ON AMC AND GAMESTOP

HEDGE FUNDS’ AMC DOOMSDAY SCENARIO

(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.)

Photo: “Monopoly Guy Graffiti – Rich Uncle Pennybags” by Indrid__Cold is licensed under CC BY-SA 2.0

If you found this post interesting, please share it on Twitter/Reddit/etc. using the buttons at the bottom of the page. This helps more people find the blog! And please leave your comments at the bottom.

Save Money on Stuff I Use:

Fundrise

This platform lets me diversify my real estate investments so I’m not too exposed to any one market. I’ve invested since 2018 and returns have been good so far. More on Fundrise in this post.

If you decide to invest in Fundrise, you can use this link to get your management fees waived for 90 days. With their 1% management fee, this could save you $250 on a $100,000 account. I will also get a fee waiver for 90-365 days, depending on what type of account you open.

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Misfits Market

My wife and I have gotten organic produce shipped to our house by Misfits for over a year. It’s never once disappointed me. Every fruit and vegetable is super fresh and packed with flavor. I thought radishes were cold, tasteless little lumps at salad bars until I tried theirs! They’re peppery, colorful and crunchy! I wrote a detailed review of Misfits here.

Use this link to sign up and you’ll save $10 on your first order. I’ll also get $10.