Trump Media alerts Nasdaq to potential market manipulation from 'naked' short selling of DJT stock

[BumRushDaShow]

Last edited Fri Apr 19, 2024, 01:48 PM - Edit history (1)

Source: CNBC

Published Fri, Apr 19 2024 8:51 AM EDT Updated 53 Min Ago


Trump Media has warned the CEO of the Nasdaq Stock Market of ‘potential market manipulation’ of the company’s stock by “naked” short selling of shares. The warning came as Trump Media has offered shareholders detailed instructions on how to avoid someone loaning out their DJT shares to short sellers, who then execute trades betting that the price of the stock will fall.

Trump Media disclosed the warning to Nasdaq CEO Adena Friedman in a filing Friday morning with the Securities and Exchange Commission. DJT’s share price has rallied in recent days, but is still sharply lower than the more than $70 per share it debuted with on March 26. Former President Donald Trump owns nearly 60% of Trump Media shares. The paper value of his stake has dropped by billions of dollars since DJT began public trading last month.

Trump Media CEO Devin Nunes in his letter to Friedman did not directly accuse anyone in particular of naked short selling, which is the sale of stocks without first having borrowed such sales for that purpose.

But Nunes noted that as of Wednesday “DJT appears on Nasdaq’s ‘Reg SHO threshold list,’ which is indicative of unlawful trading activity.” “This is particularly troubling given that ‘naked’ short selling often entails sophisticated market participants profiting at the expense of retail investors,” Nunes said.

Read more: https://www.cnbc.com/2024/04/19/trump-media-alerts-nasdaq-to-potential-market-manipulation-from-short-selling.html

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Article updated.

Previous articles -

Published Fri, Apr 19 2024 8:51 AM EDT Updated 4 Min Ago


Trump Media has warned the Nasdaq market of 'potential market manipulation' of the company's stock by "naked" short selling of shares. The warning came as Trump Media has offered shareholders detailed instructions on how to avoid someone loaning out their DJT shares to short sellers, who then execute trades betting that the price of the stock will fall.

Trump Media disclosed the warning to Nasdaq CEO Adrena Friedman in a filing Friday morning with the Securities and Exchange Commission, as DJT's share price as rallied in recent days, but is still sharply lower than the more than $70 per share it debuted with on March 26. Trump Media CEO Devin Nunes, in his letter, did not directly accuse anyone in particular of naked short selling, which is the sale of stocks without first having borrowed such sales for that purpose.

But Nunes noted that as of Wednesday "DJT appears on Nasdaq's 'Reg SHO threshold list,' which is indicative of unlawful trading activity." "This is particularly troubling given that 'naked' short selling often entails sophisticated market participants profiting at the expense of retail investors," Nunes said.

Nunes, who company owns the Truth Social app, pointed to circumstantial evidence, which included DJT being in early April the most expensive stock to short in the United States, which he said would give brokers "significant financial incentive to lend non-existent shares."

Published Fri, Apr 19 2024 8:51 AM EDT Updated 4 Min Ago


Trump Media has warned the Nasdaq market of 'potential market manipulation' of the company's stock by "naked" short selling of shares.

The warning came as Trump Media has offered shareholders detailed instructions on how to avoid someone loaning out their DJT shares to short sellers, who then execute trades betting that the price of the stock will fall.

Trump Media CEO Devin Nunes, in his letter Thursday to Nasdaq CEO Adrena Friedman, did not directly accuse anyone in particular of naked short selling, which is the sale of stocks without first having borrowed such sales for that purpose.

But Nunes, whose company owns the Truth Social app, pointed to circumstantial evidence, which included DJT being in early April the most expensive stock to short in the United States, which he said would give brokers "significant financial incentive to lend non-existent shares."


This is breaking news. Please check back for updates.

Published Fri, Apr 19 2024 8:51 AM EDT Updated 3 Min Ago


Trump Media has warned the Nasdaq market of 'potential market manipulation' of the company's stock by "naked" short selling of shares.

The warning came as Trump Media has offered shareholders detailed instructions on how to avoid someone loaning out their DJT shares to short sellers, who then execute trades betting that the price of the stock will fall.

Trump Media CEO Devin Nunes, in his letter Thursday to Nasdaq CEO Adrena Friedman, did not directly accuse anyone in particular of naked short selling, which is the sale of stocks without first having borrowed such sales for that purpose.


This is breaking news. Please check back for updates.

Original article -

Published Fri, Apr 19 2024 8:51 AM EDT Updated 2 Min Ago


This is breaking news. Please check back for updates.

[bucolic_frolic]

1. Projection. Wonder what foreign entities are riding the waves? /nt

[underpants]

2. Is shorting illegal or against the rules?

Or did the Clustertrump not understand the game?

[BumRushDaShow]

6. I saw and scanned an article

either yesterday or the day before where they were supposedly "warning" investors about ways to keep their shares from being "loaned" to short sellers.

One article is here - https://finance.yahoo.com/news/trump-media-stock-jumps-for-second-day-as-company-goes-to-battle-with-short-sellers-170612776.html

[Captain Zero]

9. Sounds like naked shorting is illegal

Interesting trfmpf has alerted that this might be happening to their stock. Ahhhhhhh.... Someone should ask them is this a bug or a feature of capitalism. And if it's capitalism, how could that possibly be bad?

[paleotn]

15. Yes, it is.

[SWBTATTReg]

39. Well, naked short selling isn't really illegal, it's just that if you get caught, w/ the short underway, and the

stock goes up and up, then you're caught holding the bag, and must purchase the stock djt in order to stop your losses, despite the price increase. The price of djt could go up $10 or $20 or even more, you're out the loss until you can buy the stock to replace the naked short.

[rampartc]

12. trump does not need to understand the game

but i suspect any naked short selling is being directed from the top for maximum cash extraction.

trump is accomplishing no less than the destruction of wall st.

[Bernardo de La Paz]

19. Nonsense. tRump is not "destroying wall st". Wall Street barely senses DJT trades. DJT is a tiny blip

Volume of DJT yesterday was 17 million shares, at say an average price of $30 = $510 million.

Yesterday NVDA traded 43 million shares at an average of about $850 = $36 billion, more than 70 times larger. TSLA 90 million shares at $150 = over $15 billion.

[rampartc]

57. do you think this blatant insider trading

stock watering, pump and dump is inspiring confidence in the market?

each billion that trump extrscts from the market is coming from somewhere, probably the pension funds and investments of the working class.

[Bernardo de La Paz]

58. Insider trading is not short selling or naked short selling. Stocks like DJT are nothing new. . . nt

[Bernardo de La Paz]

16. Shorting is not illegal, but naked shorting is illegal

Shorting is 1) Borrowing shares, 2) Selling them immediately, 3) waiting for anticipated price drop, 4) buying the same number of shares to take limited profit or to stop unlimited loss, 5) returning the borrowed shares.

Naked shorting skips steps 1 and 5. It manipulates the market because the number of shares being traded exceeds the number of shares nominally available to be traded. In sufficient quantity, the selling in step 2 depresses the price. In regular shorting, step 2 does not artificially depress the price. It does depress the price in the same way that the price would have been depressed if the actual owner of the shares sold them. In naked shorting, there is no actual owner, hence market distortion.

[underpants]

25. Thanks. I skipped a step but I learned something from you

I skipped over the naked part.

[rurallib]

31. For years I have been trying to understand short selling

and you sum it up in a short understandable paragraph - Thank you so much!

[paleotn]

18. Yes, it's illegal. A type of fraud.

i.e., selling something you don't actual have. Short selling itself is perfectly legal, and a means of profiting off financial market stupidity. Similar to the theme in Michael Lewis's book The Big Short and subsequent movie.

Naked short selling is doing roughly the same but skipping several very important steps.

[underpants]

27. Thanks

[TexasBushwhacker]

22. I was thinking the same thing

Is it "market manipulation" if the stock is a POS?

[underpants]

26. See 16 & 18

[melm00se]

38. Short selling is legal

"Naked" short selling is not.

Short selling confuses the hell out of me but here is the way it works:

With normal short selling, the investor borrowers X number of shares and then agrees to sell that number of shares to someone at $X per share at some point in the future.

IOW:

XYZ stock is trading at $10/share.
I agree to sell 5 shares to underpants at $10/share 6 months from now and underpants locks in that price by paying a fee per share.
As I don't own those shares, I have to have someway of getting access to them so I, for a fee, borrow them from someone else.
What I am hoping is that XYZ drops in price below $10 (+ my borrowing fee) so when underpants buys the shares I make money.
What underpants is hoping is that XYZ goes up so he can buy XYZ for $10 when it is trading at $15

Naked short sales are the same except that I don't have/didn't borrow the 5 shares of XYZ. What happens if I can't buy the 5 shares to deliver to underpants?

Now, 5 shares is not a huge deal but imagine if it was 100,000 shares involving hundreds (or thousands) of traders. This creates issues of

Fraud - in our example, a 10 basis point fee per share is $0.01/share, across a 100,000 share= $1000. If I offer this to 500 people and they bite and I don't deliver (but have already been paid) that is $500,000 gone *poof*.

Market manipulation - If I short sold XYZ at $10 and the price skyrocketed (legitimately) to $100/share, I am going to get my clock cleaned. So I might conspire with others like me to spread "news" that might cause the share price to drop.

Market volitivity - normal short selling (my borrowing shares) is recorded and the volume is built into the share price. With naked short selling, there is really no easy way to see how many shorts are out there so that is not built into the share price. When people come thundering it to cover their short sales, this can create artificial swings in share value.

I hope this made some sense. I really don't fully understand it myself which is why I run away from these types of transactions.

[captain queeg]

3. Yesterday trump issued instructions to try to keep investors from short selling.

I don’t know what the word “naked” applied here means. But the first thing I thought of was trump was trying to protect the value till he can cash in on

[rampartc]

13. in order to legally execute a short sale

the broker must "borrow" the shares from another customer or another broker.

if there are no such shares to borrow, having been previously lent to another or there not being enough shares in the world, the transaction would not be legal, amounting to selling something that is not yours.

between the obvious insider trading and other shenanigans on this stock trump , and kushner, probably should be jailed.

[unblock]

4. Hahaha! "Wahhh! Their short selling is interfering with my pump and dump manipulation!"

[C_U_L8R]

5. Yet more incessent whining.

When will it ever stop !!! Jeeeezus.

[Haggard Celine]

44. Trump whines more than anyone I've ever seen.

Why isn't that an issue? You'd think people would get tired of that. I especially can't stand wealthy people who whine. Of course, he's not as wealthy as he claims to be. Still, his little followers think 'oh, poor Trump, better help him out with a donation!' My parents and grandparents always told me not to whine because many people are a lot worse off than we were. Guess Trump was raised by wolves or something.

[FredGarvin]

7. Manipulation at it's best

The stock is 40% higher this morning than it was yesterday at the same time.

Trump gonna cash out.

Unreal

[CrispyQ]

8. Ha ha!

I remember Monday reading a headline how his stock tanked over the weekend & what a smile I started teh week with & here's a smile to go out! People are betting he's gonna fail. Yeah baby!!!

[PatSeg]

14. Yeah, I think that's a pretty safe bet

With anything related to Trump, failure is pretty much guaranteed.

[wolfie001]

10. I'm patiently waiting for Prince Bonesaw and russki Oligarchs (and gawd knows who else) to step in........

......and complete the job of manipulating this sh&tshow. $5 million revenue? WFT
P.S.- Did Devin Nunes ever find his cow?

[Doodley]

11. Suddenly R/W media care about naked shorting. They only ever care when it helps them.

[no_hypocrisy]

17. Down to 17.01

I’d say Panic Selling more than shorting at this point.

[BumRushDaShow]

20. Oh my.

They may have to suspend trading.

ETA - am seeing it listed in the $35 range.

[no_hypocrisy]

21. My bad. Looking at DJTW. Wrong one.

[BumRushDaShow]

24. Ah okay...

Soon enough though. You just never know!

[ProfessorGAC]

54. Where Did You See Tgat?

It hasn't been at $17 since mid January.
Open
36.95
High
37.19
Low
32.67
It closed at $36.38.
https://www.cnn.com/markets/stocks/DJT

[no_hypocrisy]

55. I made a mistake. Quoted DJTWW, not DJT.

[ProfessorGAC]

56. Oh, Another Worthless Stock

I can see how you could get the fake investments confused!

[Marthe48]

23. Found what I was looking for! Looked for more definition about short selling

but I don't understand the steps. A person borrows shares. They sell the shares they borrowed. If the stocks lose value, the person who sold the shares benefits by buying the shares back at that lower value. If the stock increases in value, the seller loses money on the stock they borrowed and sold. It seems to be a bet against a stock rising in value.

Why do they have to borrow shares? If they own shares, can they short sell those? Does the entity they borrow shares from benefit in any way from a short sale? Does the person who borrowed the shares have to buy them back if they increase in value? I don't understand how this strategy actually works. Any links that would help me understand? Thank you

In the meantime, whether I own shares or not, here's hoping that traitor and his henchmen go broke.

I don't have a perfect understanding, but I understand the basics a little better

[FakeNoose]

30. There was a movie out last year called "Dumb Money"

... that is entertaining as well as a good explainer for what short selling means to Wall Street.

The movie was about the GameStop shares that exploded almost 30 years ago, and it has nothing to do with Chump's businesses. In that movie several "little guys" held out against a few big Wall Street traders and ultimately made a fortune. But they were lucky (some of them) and they didn't bet more than they could afford to lose. It shows how short-selling might make you some money if your timing is perfect. You can also lose a lot if you aren't paying attention.

[Marthe48]

32. I skimmed through an explanation on Investopedia

Finally found something that explained in a way I can understand.

[BumRushDaShow]

33. It wasn't even 30 years ago - it was 3 years ago and I remember the wild stuff happening

This sort of recapped it - https://www.cnbc.com/2021/01/30/gamestop-reddit-and-robinhood-a-full-recap-of-the-historic-retail-trading-mania-on-wall-street.html

And the coda to the whole thing (after all kinds of investigations and hearings and whatnot) - https://www.thestreet.com/memestocks/other-memes/robinhoods-vlad-tenev-says-gamestop-stock-saga-tested-remote-crisis-management

It was supposedly the radical "little guys" (through app-based brokerage Robinhood) who showed how to "pump and dump" when GameStop was about to pretty much go out of business.

[FakeNoose]

45. OK thanks for correcting me

I was thinking it happened in the 1990s because of the way the characters were dressed.
But back then there were no blogs or Youtube videos, so what was I thinking? Duh!

[BumRushDaShow]

48. GameStop was probably around then

because of course, video game rentals/sales were a big thing in the '90s. One of my younger nephews who is 29 now, lived in there when he was a kid (and even as a young adult with a "gaming rig" ).

[FakeNoose]

49. Yep, that's when I used to shop at GameStop

.... haven't gone there since then.

Also I don't buy stocks so the GameStop story didn't make a dent in my attention span.
It happened during the Covid lockdown, am I right?

[BumRushDaShow]

51. Yes

This seemed to have started out as a wild "bad boys getting back at the corporate traders" thing - especially since the participants used an "online brokerage" that went by the name "Robinhood". It was like a "game" as they did stuff that defied all the business analysts and took what was a company about to go out of business, to suddenly achieving big "on paper" worth.

In recent articles, it seems that company has been taken over by RW loons now...

[jmowreader]

60. Okay...

1. You could “short” your own stock, but they don’t call it that when you do. Let’s say you really like two stocks, a company that makes boats and one that makes skis. The boat company’s best stock price is in July and its worst in December…and the ski company’s stock is best in December and worst in July. So you tell your broker to sell off all your boat stock and buy ski stock on July 15, and sell all the ski stock for boat stock on December 15. This will make you lots of money. They call it a short sale because you didn’t own the stock,

2. Since you pay a fee to the stock owner to, in essence, rent the stock you’re selling the stock owner makes money from that.

3. Yes you do, and that’s the inherent risk in doing this. Let’s say you want to short Acme, which is at $20. You decide the price at which it makes sense to repurchase the stock is $10, which will pay the fees and give you the profit margin you want. The lady who owns the Acme shares you’re shorting thinks the right price to sell it at is $30. Unfortunately for you the new Road Runner cartoon came out and five Acme products in it worked as advertised. The stock shot from $15 to $50. You get a phone call: “Marthe, I need that Acme stock back by the end of the day.” Now you need to come up with the money to buy her new stock right now.

[Mawspam2]

28. But didn't DJT also just file to dump an additional...

...21.4 Million new shares onto the market, and "re-sell" 146.1 million currently locked-up shares?

SELL, MORTIMER, SELLLLLLL!!!

[Hugin]

29. This is srsly like a pimp complaining to the FBI...

About one of his hookers smoking all of the crack.



Where do the arrests begin?

[Captain Zero]

34. Perfect Analogy!

[dalton99a]

35. +1

[hadEnuf]

36. The quick answer is:

Bullshit.

Anything from "Trump", be it media or clown-type sneakers is bullshit. No analysis needed.

[PSPS]

37. "sophisticated market participants profiting at the expense of retail investors" - sums up how the stock market works.

[SWBTATTReg]

40. Exactly. The little guy/gal doesn't matter one wit. One is best off not dealing in this market, being that

far more sophisticated market participants are wheeling and dealing in this small space, it's almost too dangerous for a 'retail' (us) person to effectively make any money on this particular play.

[mathematic]

41. Stock market scammers talk about "naked shorts" and DRS in order to fleece retail suckers

Over the last few years a number of financial stock cults have sprung up in the wake of Gamestop's rise. They've borrowed lots of the paranoia and time-tested scam language from financial-scams past and have synthesized into a grand narrative.

Gamestop's (GME) cultists are at the forefront of this. They idolize the CEO and chairman of Gamestop, Ryan Cohen, who praised the Jan 6ers and is a covid denialist. If you're unfamiliar with him, you can think of him as a dime store Elon Musk. He first invested in Gamestop in late 2020.

Some background:
Gamestop is a retailer of video game hardware and software, new and used. It's a poorly run company with a bad reputation with employees and customers. In 2020, many financial professionals thought the company, which had be circling the drain for years, would finally go out of business due harder operating conditions during covid. They (legally) shorted the stock, which is a bet that the company would do worse. In late 2020 retail investors and some outside investors like Ryan Cohen and Michael Burry had taken the opposite view that the bankruptcy concerns were overblown. This dynamic led to the Jan 2021 meme stock explosion that saw GME stock increase 100x in value due short sellers closing their position followed by a buying frenzy. (There was an SEC report that confirmed this).

In the wake of the retail buying frenzy there were a lot of retail traders that had bought at the highs and were suffering heavy unrealized losses. They began to construct ever more elaborate theories as to why they were being cheated out of millions (and even billions!) and how, inevitably, the corruption would be untenable, would be exposed, and they would have their riches.

At the core of it, these retail traders were themselves engaging in a scheme to manipulate the price of a security. They were (and still are to this day) trying to engineer a short squeeze in GME.

The pitch is that there are short sellers that face "unlimited" liability and that if all the retail stockholders can hold firm their shares of GME that they can force the liquidation of, essentially, all the wealth of the stock market and the US itself via government bailouts in order to satisfy these claims. It's sovereign-citizen level reasoning that sees them becoming unfathomably wealthy and everybody that doesn't hold GME shares utterly ruined. Remarkably, they see themselves as the good guys "fighting corruption".

They focus on "naked" shorts for two reasons. First, the amount a stock is shorted is roughly known and reported. If this number is too low then the scheme doesn't work. So there needs to be hidden shorts that cult members can take on faith exist. Two, naked shorting, while never a widespread practice, was banned during the Bush administration so that the existence of naked shorts gives the cult a righteous cause to fight against. (It's technical but naked shorting is only allowed for the purposes of bonafide market making. Market makers do not hold positions, positive or negative for very long. Think of it kind of like walmart selling apples... they have an inventory that they need to conduct the transaction but they're not accumulating apples. Market making is highly regulated.)

They focus on DRS, which stands for direct registered shares, as a mechanism to enforce their scheme to manipulate the price of a security. Most people hold their stocks in the brokerage account. These shares are technically registered to an organization, not you, in order to facilitate bookkeeping. To DRS your shares means to remove the shares' registration from this organization to your own name. Eventually, the theory goes, retail will DRS all the available shares thereby cornering the market and causing a short squeeze. They obfuscate the language slightly because when you say it like that it sounds really illegal. Scam CEOs DRS this because directly registered shares take longer to sell and so insiders can dump all their shares before retail holders can react.

Over the last few years we've seen a gradual convergence of meme stock cults with other right wing cults. Even if the original participants in the meme stocks were apolitical or not MAGA, they've been pipelined towards the right wing. Trump media, in some ways, is the apotheosis of this phenomenon.

[FakeNoose]

46. Thanks for this background info

I'll confess that a lot of this Wall Street talk goes over my head for one reason - lack of interest.

[ZonkerHarris]

42. Accuse with no facts. Very trumpian.

[PurgedVoter]

43. If a conservative is complaining about someone doing a crime, the odds are really good you already know who is doing it

Look at it, these people have shares of overvalued stock in a company with no future and no profit. No cool kids will ever make this place home. Best they can do is truck and gun porn. So what do you do when you can't legally sell stock that is tanking fast and you know it should be tanking faster? I don't know, maybe we sell it short. Maybe a third of it, so if it does go up, we can cover the cost. This way we play both sides and make some money if this thing tanks like we think it will, with our inside information. If it wins, cause maybe if TFG wins the election and takes over he will make it mandatory that everyone pay into it if they want to be able to safely cross the street. In that case, having a third to pay off the third and a third to make profit with makes sense.
This way you only get a third of the money either way, but it's better than a pretty sure chance you lose everything.

[FakeNoose]

47. We've seen it too many times, it's one of Chump's favorite strategies

We know he's guilty of something, and he probably just incriminated himself.

[Karma13612]

50. I figured something was going on. We shall see!

[Deuxcents]

52. Everything this guy touches..every thing..chaos is not far behind

[IbogaProject]

53. This absolutely needs to be fixed

After a nice long delay to fully investigate any potential harms to DJT.O and by extension the former white house resident. We shouldn't rush to judgement until we are positive that this tactic has seriously harmed Him and his business.

[ThoughtCriminal]

59. The company is less than worthless.

The paperclips in one of the desk drawers are worth more.

All this imaginary value is nothing more than Monopoly Money except the latter can actually be used to play Monopoly.