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A House of Cards - Part 1
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=========================
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**Author: [u/atobitt](https://www.reddit.com/user/atobitt/)**
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[God Tier DD 👨🔬](https://www.reddit.com/r/Superstonk/search?q=flair_name%3A%22God%20Tier%20DD%20%F0%9F%91%A8%E2%80%8D%F0%9F%94%AC%22&restrict_sr=1)
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TL;DR- The DTC has been taken over by big money. They transitioned from a manual to a computerized ledger system in the 80s, and it played a significant role in the 1987 market crash. In 2003, several issuers with the DTC wanted to remove their securities from the DTC's deposit account because the DTC's participants were naked short selling their securities. Turns out, they were right. The DTC and it's participants have created a market-sized naked short selling scheme. All of this is made possible by the DTC's enrollee- Cede & Co.
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____________________________________________________________________________________________________________
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I hit the image limit in this DD. Given this, and the fact that there's already SO MUCH info in this DD, I've decided to break it into AT LEAST 2 posts. So stay tuned.
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Previous DD
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[1\. Citadel Has No Clothes](https://www.reddit.com/r/GME/comments/m4c0p4/citadel_has_no_clothes/)
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[2\. BlackRock Bagholders, INC.](https://www.reddit.com/r/GME/comments/m7o7iy/blackrock_bagholders_inc/)
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[3\. The EVERYTHING Short](https://www.reddit.com/r/GME/comments/mgucv2/the_everything_short/)
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[4\. Walkin' like a duck. Talkin' like a duck](https://www.reddit.com/r/Superstonk/comments/ml48ov/walkin_like_a_duck_talkin_like_a_duck/)
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____________________________________________________________________________________________________________
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*Holy SH*T!*
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The events we are living through *RIGHT NOW* are the 50-year ripple effects of stock market evolution. From the birth of the DTC to the cesspool we currently find ourselves in, this DD will illustrate just how fragile the *House of Cards* has become.
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We've been warned so many times... We've made the same mistakes *so. many. times.*
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And we never seem to learn from them..
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____________________________________________________________________________________________________________
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In case you've been living under a rock for the past few months, the DTCC has been proposing a boat load of rule changes to help better-monitor their participants' exposure. If you don't already know, the DTCC stands for Depository Trust & Clearing Corporation and is broken into the following (primary) subsidiaries:
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1. Depository Trust Company (DTC) - *centralized clearing agency that makes sure grandma gets her stonks and the broker receives grandma's tendies*
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2. National Securities Clearing Corporation (NSCC) - *provides clearing, settlement, risk management, and central counterparty (CCP) services to its members for broker-to-broker trades*
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3. Fixed Income Clearing Corporation (FICC) - *provides central counterparty (CCP) services to members that participate in the US government and mortgage-backed securities markets*
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*Brief* *history* *lesson: I promise it's relevant (this* [*link*](https://www.dtcc.com/annuals/museum/index.html) *provides all the info that follows).*
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The DTC was created in 1973. It stemmed from the need for a centralized clearing company. Trading during the 60s went through the roof and resulted in many brokers having to quit before the day was finished so they could manually record their mountain of transactions. All of this was done on paper and each share certificate was physically delivered. This obviously resulted in many failures to deliver (FTD) due to the risk of human error in record keeping. In 1974, the Continuous Net Settlement system was launched to clear and settle trades using a rudimentary internet platform.
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In 1982, the DTC started using a [Book-Entry Only](https://www.investopedia.com/terms/b/bookentrysecurities.asp) (BEO) system to underwrite bonds. For the first time, there were no physical certificates that actually traded hands. Everything was now performed virtually through computers. Although this was advantageous for many reasons, it made it MUCH easier to commit a certain type of securities fraud- naked shorting.
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One year later they adopted [NYSE Rule 387](https://www.finra.org/rules-guidance/rulebooks/retired-rules/rule-387) which meant most securities transactions had to be completed using this new BEO computer system. Needless to say, explosive growth took place for the next 5 years. Pretty soon, other securities started utilizing the BEO system. It paved the way for growth in mutual funds and government securities, and even allowed for same-day settlement. At the time, the BEO system was a tremendous achievement. However, we were destined to hit a brick wall after that much growth in such a short time.. By October 1987, that's exactly what happened.
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____________________________________________________________________________________________________________
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[*"A number of explanations have been offered as to the cause of the crash... Among these are computer trading, derivative securities, illiquidity, trade and budget deficits, and overvaluation.."*](https://historynewsnetwork.org/article/895)*.*
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If you're wondering where the birthplace of High Frequency Trading (HFT) came from, look no further. The same machines that automated the exhaustively manual reconciliation process were also to blame for amplifying the fire sale of 1987.
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[](https://preview.redd.it/3l08f1ud6bu61.png?width=810&format=png&auto=webp&s=2331f409fb4f60b3d62e475c58cf44211b4122a3)
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https://historynewsnetwork.org/article/895
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The last sentence indicates a much more pervasive issue was at play, here. The fact that we still have trouble explaining the calculus is even more alarming. The effects were so pervasive that it was dubbed the [1st global financial crisis](https://www.federalreservehistory.org/essays/stock-market-crash-of-1987)
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Here's another great summary published by the [NY Times](https://www.nytimes.com/2012/10/19/business/a-computer-lesson-from-1987-still-unlearned-by-wall-street.html): *"..**to be fair to the computers.. [they were].. programmed by fallible people and trusted by people who did not understand the computer programs' limitations. As computers came in, human judgement went out."* Damned if that didn't give me goosiebumps... ____________________________________________________________________________________________________________
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Here's an EXTREMELY relevant [explanation](https://historynewsnetwork.org/article/895) from [Bruce Bartlett](https://www.creators.com/author/bruce-bartlett) on the role of derivatives:
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[](https://preview.redd.it/tu88v96vqau61.png?width=805&format=png&auto=webp&s=6e69760997379cb404163cfc6a11b411adbaa344)
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Notice the last sentence? A major factor behind the crash was a disconnect between the price of stock and their corresponding derivatives. The value of any given stock should determine the derivative value of that stock. It shouldn't be the other way around. This is an important concept to remember as it will be referenced throughout the post.
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In the off chance that the market DID tank, they hoped they could contain their losses with [portfolio insurance](https://www.investopedia.com/terms/p/portfolioinsurance.asp#:~:text=Portfolio%20insurance%20is%20a%20hedging,also%20refer%20to%20brokerage%20insurance)*.* Another [article from the NY times](https://www.nytimes.com/2012/10/19/business/a-computer-lesson-from-1987-still-unlearned-by-wall-street.html) explains this in better detail. ____________________________________________________________________________________________________________
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[](https://preview.redd.it/rf6ocoe9abu61.png?width=629&format=png&auto=webp&s=e638c4479aceac77a003ae86fa1cfdd23f5406b8)
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[](https://preview.redd.it/8igwi6mflbu61.png?width=612&format=png&auto=webp&s=853945852aea5a355266bf52b6f1fa573db1e29a)
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[](https://preview.redd.it/fe78gr1qlbu61.png?width=608&format=png&auto=webp&s=4ec59987333e04cef07541229161b3ff30881444)
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A major disconnect occurred when these futures contracts were used to intentionally tank the value of the underlying stock. In a perfect world, organic growth would lead to an increase in value of the company (underlying stock). They could do this by selling more products, creating new technologies, breaking into new markets, etc. This would trigger an organic change in the derivative's value because investors would be (hopefully) more optimistic about the longevity of the company. It could go either way, but the point is still the same. This is the type of investing that most of us are familiar with: investing for a better future.
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I don't want to spend too much time on the crash of 1987. I just want to identify the factors that contributed to the crash and the role of the DTC as they transitioned from a manual to an automatic ledger system. The connection I really want to focus on is the ENORMOUS risk appetite these investors had. Think of how overconfident and greedy they must have been to put that much faith in a computer script.. either way, same problems still exist today.
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Finally, the comment by Bruce Bartlett regarding the mismatched investment strategies between stocks and options is crucial in painting the picture of today's market.
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Now, let's do a super brief walkthrough of the main parties within the DTC before opening this can of worms.
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____________________________________________________________________________________________________________
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I'm going to talk about three groups within the DTC- issuers, participants, and Cede & Co.
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Issuers are companies that issue securities (stocks), while participants are the clearing houses, brokers, and other financial institutions that can utilize those securities. Cede & Co. is a subsidiary of the DTC which holds the share certificates.
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Participants have MUCH more control over the securities that are deposited from the issuer. Even though the issuer created those shares, participants are in control when those shares hit the DTC's doorstep. The DTC transfers those shares to a holding account *(Cede & Co.)* and the participant just has to ask "*May I haff some pwetty pwease wiff sugar on top?"* ____________________________________________________________________________________________________________
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Now, where's that can of worms?
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Everything was relatively calm after the crash of 1987.... until we hit 2003..
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**deep breath**
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The DTC started receiving several requests from issuers to pull their securities from the DTC's depository. I don't think the DTC was prepared for this because they didn't have a written policy to address it, let alone an official rule. Here's the half-assed response from the DTC:
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[](https://preview.redd.it/1ctpj263zdu61.png?width=788&format=png&auto=webp&s=6ff2e2d543f53a6ece6d95c334ed995fe67f9c8d)
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https://www.sec.gov/rules/sro/34-47978.htm (section II)
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Realizing this situation was heating up, the DTC proposed [SR-DTC-2003-02](https://www.sec.gov/rules/sro/34-47978.htm#P19_6635)..
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[](https://preview.redd.it/io22id3n7eu61.png?width=774&format=png&auto=webp&s=424ef5b6a70d073c62a47f6a1b82cd739b527b88)
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https://www.sec.gov/rules/sro/34-47978.htm#P19_6635
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Honestly, they were better of WITHOUT the new proposal.
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It became an even BIGGER deal when word got about the proposed rule change. Naturally, it triggered a TSUNAMI of comment letters against the DTC's proposal. There was obviously something going on to cause that level of concern. Why did *SO MANY* issuers want their deposits back?
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...you ready for this sh*t?
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____________________________________________________________________________________________________________
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As outlined in the DTC's opening remarks:
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[](https://preview.redd.it/eq9q8mcubeu61.png?width=1028&format=png&auto=webp&s=eee6231336e398b0d53299a2a7639fdfd333af8c)
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https://www.sec.gov/rules/sro/34-47978.htm#P19_6635
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*OK... see footnote 4.....*
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[](https://preview.redd.it/v884rfqwbeu61.png?width=1053&format=png&auto=webp&s=6fe5db76c9c6fd5e596bbe3c3c64bc6feb64fd97)
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https://www.sec.gov/rules/sro/34-47978.htm#P19_6635
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UHHHHHHH WHAT!??! Yeah! I'd be pretty pissed, too! Have my shares deposited in a clearing company to take advantage of their computerized trades just to get kicked to the curb with NO WAY of getting my securities back... AND THEN find out that the big-d*ck "participants" at your fancy DTC party are literally short selling my shares without me knowing....?!
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....This sound familiar, anyone??? IDK about y'all, but this "trust us with your shares" BS is starting to sound like a major con.
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The DTC asked for feedback from all issuers and participants to gather a consensus before making a decision. All together, the DTC received 89 comment letters (a pretty big response). 47 of those letters opposed the rule change, while 35 were in favor.
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*To save space, I'm going to use smaller screenshots. Here are just a few of the opposition comments..*
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____________________________________________________________________________________________________________
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[](https://preview.redd.it/ds068omndeu61.png?width=894&format=png&auto=webp&s=7958cbf3fde10e1bbb81c6adeb87f2bfc5dc8fde)
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https://www.sec.gov/rules/sro/dtc200302/srdtc200302-89.pdf
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____________________________________________________________________________________________________________
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And another:
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[](https://preview.redd.it/953v7l47feu61.png?width=884&format=png&auto=webp&s=83c2d1998b3c111da7cb31b183b83c62abbe353b)
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https://www.sec.gov/rules/sro/dtc200302/rsrondeau052003.txt
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____________________________________________________________________________________________________________
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AAAAAAAAAAND another:
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[](https://preview.redd.it/pkifz41sqeu61.png?width=804&format=png&auto=webp&s=733a219050239012a2b6b29c1985bdbd1df60303)
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https://www.sec.gov/rules/sro/dtc200302/msondow040403.txt
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____________________________________________________________________________________________________________
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*Here are a few in favor**..*
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*All of the comments I checked were participants and classified as market makers and other major financial institutions... go f*cking figure.*
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[](https://preview.redd.it/myk7675zseu61.png?width=617&format=png&auto=webp&s=94c622511fc3392bacca6f1c34375920612bc9bb)
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https://www.sec.gov/rules/sro/dtc200302/srdtc200302-82.pdf
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____________________________________________________________________________________________________________
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Two
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[](https://preview.redd.it/ouwx18qmteu61.png?width=692&format=png&auto=webp&s=39dcaabcc228e60ba5e472353285aa330c13ea0a)
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https://www.sec.gov/rules/sro/dtc200302/srdtc200302-81.pdf
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____________________________________________________________________________________________________________
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Three
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[](https://preview.redd.it/xpzt606pueu61.png?width=600&format=png&auto=webp&s=79685c694f661b9c7d03093a8908eebe6cad421e)
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https://www.sec.gov/rules/sro/dtc200302/rbcdain042303.pdf
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____________________________________________________________________________________________________________
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Here's the [full list](https://www.sec.gov/rules/sro/dtc200302.shtml) if you wanna dig on your own.
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...I realize there are advantages to "paperless" securities transfers... However... It is EXACTLY what Michael Sondow said in his comment letter above.. *We simply cannot trust the DTC to protect our interests when we don't have physical control of our assets***.**
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Several other participants, including Edward Jones, Ameritrade, Citibank, and Prudential overwhelmingly favored this proposal.. How can someone NOT acknowledge that the absence of physical shares only makes it easier for these people to manipulate the market....?
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This rule change would allow these 'participants' to continue doing this because it's extremely profitable to sell shares that don't exist, or have not been collateralized. Furthermore, it's a win-win for them because it forces issuers to keep their deposits in the holding account of the DTC...
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Ever heard of the [fractional reserve banking system](https://www.investopedia.com/terms/f/fractionalreservebanking.asp#:~:text=Fractional%20reserve%20banking%20is%20a,by%20freeing%20capital%20for%20lending)?? Sounds A LOT like what the stock market has just become.
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Want proof of market manipulation? Let's fact-check the claims from the opposition letters above. *I'm only reporting a few for the time period we discussed (2003ish). This is just to validate their claims that some sketchy sh*t is going on.*
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1. [UBS Securities](https://files.brokercheck.finra.org/firm/firm_7654.pdf) (formerly UBS Warburg):
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1. pg 559; SHORT SALE VIOLATION; 3/30/1999
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2. pg 535; OVER REPORTING OF SHORT INTEREST POSITIONS; 5/1/1999 - 12/31/1999
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3. PG 533; FAILURE TO REPORT SHORT SALE INDICATORS;INCORRECTLY REPORTING LONG SALE TRANSACTIONS AS SHORT SALES; 7/2/2002
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2. [Merrill Lynch](https://files.brokercheck.finra.org/firm/firm_16139.pdf) (Professional Clearing Corp.):
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1. pg 158; VIOLATION OF SHORT INTEREST REPORTING; 12/17/2001
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3. [RBC](https://files.brokercheck.finra.org/firm/firm_31194.pdf) (Royal Bank of Canada):
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1. pg 550; FAILURE TO REPORT SHORT SALE TRANSACTIONS WITH INDICATOR; 9/28/1999
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2. pg 507; SHORT SALE VIOLATION; 11/21/1999
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3. pg 426; FAILURE TO REPORT SHORT SALE MODIFIER; 1/21/2003
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Ironically, I picked these 3 because they were the first going down the line.. I'm not sure how to be any more objective about this.. Their entire FINRA report is littered with short sale violations. Before anyone asks "how do you know they aren't ALL like that?" The answer is- I checked. If you get caught for a short sale violation, chances are you will ALWAYS get caught for short sale violations. Why? Because it's more profitable to do it and get caught, than it is to fix the problem.
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Wanna know the 2nd worst part?
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Several comment letters asked the DTC to investigate the claims of naked shorting BEFORE coming to a decision on the proposal.. I never saw a document where they followed up on those requests.....
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NOW, wanna know the WORST part?
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[](https://preview.redd.it/q6jk7as8rfu61.png?width=1057&format=png&auto=webp&s=c66aac021818993e6c23bb7fe96382de8cc9fe7e)
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https://www.sec.gov/rules/sro/34-47978.htm#P99_35478
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The DTC passed that rule change....
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They not only prevented the issuers from removing their deposits, they also turned a 'blind-eye' to their participants manipulative short selling, even when there's public evidence of them doing so...
|
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....Those companies were being attacked with shares THEY put in the DTC, by institutions they can't even identify...
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___________________________________________________________________________________________________________
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|
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..Let's take a quick breath and recap:
|
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|
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The DTC started using a computerized ledger and was very successful through the 80's. This evolved into trading systems that were also computerized, but not as sophisticated as they hoped.. They played a major part in the 1987 crash, along with severely desynchronized derivatives trading.
|
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In 2003, the DTC denied issuers the right to withdraw their deposits because those securities were in the control of participants, instead. When issuer A deposits stock into the DTC and participant B shorts those shares into the market, that's a form of [rehypothecation](https://www.investopedia.com/terms/r/rehypothecation.asp#:~:text=Rehypothecation%20is%20a%20practice%20whereby,or%20a%20rebate%20on%20fees). This is what so many issuers were trying to express in their comment letters. In addition, it hurts their company by driving down it's value. They felt robbed because the DTC was blatantly allowing it's participants to do this, and refused to give them back their shares..
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It was critically important for me to paint that background.
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____________________________________________________________________________________________________________
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..now then....
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Remember when I mentioned the DTC's enrollee- Cede & Co.?
|
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[](https://preview.redd.it/97z3b2k9pju61.png?width=283&format=png&auto=webp&s=67ad209f338a0ccebfaee09cd43944730ac35279)
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https://www.sec.gov/rules/sro/34-47978.htm#P19_6635 (section II)
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I'll admit it: I didn't think they were that relevant. I focused so much on the DTC that I didn't think to check into their enrollee...
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..Wish I did....
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[](https://preview.redd.it/oqpj59jypju61.png?width=830&format=png&auto=webp&s=a7de5c100699c85132b531b501b79a8bafcdfa18)
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https://www.americanbanker.com/news/you-dont-really-own-your-securities-can-blockchains-fix-that
|
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|
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That's right.... Cede & Co. hold a "master certificate" in their vault, which NEVER leaves. Instead, they issue an *IOU* for that master certificate..
|
||||
|
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Didn't we JUST finish talking about why this is such a major flaw in our system..? And that was almost 20 years ago...
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|
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Here comes the mind f*ck
|
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|
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[](https://preview.redd.it/o4xemx63rju61.png?width=1117&format=png&auto=webp&s=26f60bceb160cefcd95b0d55d2b375f4058981e2)
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https://smithonstocks.com/part-8-illegal-naked-shorting-series-who-or-what-is-cede-and-what-role-does-cede-play-in-the-trading-of-stocks/
|
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|
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[](https://preview.redd.it/1yfr9x0arju61.png?width=1109&format=png&auto=webp&s=066cac93b0c8fb05e617c81e9fc63eeacb847d4f)
|
||||
|
||||
https://smithonstocks.com/part-8-illegal-naked-shorting-series-who-or-what-is-cede-and-what-role-does-cede-play-in-the-trading-of-stocks/
|
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|
||||
____________________________________________________________________________________________________________
|
||||
|
||||
Now.....
|
||||
|
||||
You wanna know the BEST part???
|
||||
|
||||
*I found a list of all the DTC* [*participants*](https://www.dtcc.com/-/media/Files/Downloads/client-center/DTC/alpha.pdf) *that are responsible for this mess..*
|
||||
|
||||
I've got your name, number, and I'm coming for you- *ALL OF YOU*
|
||||
|
||||
*to be continued.*
|
||||
|
||||
DIAMOND.F*CKING.HANDS
|
||||
288
DD/Project-Tartarus/Chaos-Theory-The-EVERYTHING-Connection.md
Normal file
288
DD/Project-Tartarus/Chaos-Theory-The-EVERYTHING-Connection.md
Normal file
@ -0,0 +1,288 @@
|
||||
Chaos Theory - The EVERYTHING Connection
|
||||
========================================
|
||||
|
||||
**Author: [u/sharkbaitlol](https://www.reddit.com/user/sharkbaitlol/)**
|
||||
|
||||
[DD 👨🔬](https://www.reddit.com/r/Superstonk/search?q=flair_name%3A%22DD%20%F0%9F%91%A8%E2%80%8D%F0%9F%94%AC%22&restrict_sr=1)
|
||||
|
||||
EDIT 1: Thank you everyone for the feedback so far; I posted this here as a means to incite further conversation and thoughts. I'm modifying this post as I go, understanding that certain elements are simply TOO speculative.
|
||||
|
||||
EDIT 2: There seems to be concern in how I've represented Swiss Re as a reinsurer. I'd just like to confirm that they self-identify as such on most of their portals. You can verify this via a quick Google Search. They also [DO handle re/insurance asset management](https://www.swissre.com/our-business/managing-our-assets) contrary to what has been mentioned.
|
||||
|
||||
EDIT 3: [BlackRock appears to be eyeing Credit Suisse fund management arm](https://www.reuters.com/article/us-credit-suisse-asset-management-m-a-ex-idUSKBN2BW2CT). I'll let you speculate what this may mean in relation to their existing relationship with Swiss Re
|
||||
|
||||
EDIT 4: THE MODS DID NOT TAKE DOWN THE POST. THIS WAS A RESULT OF ME ATTEMPTING TO INCLUDE THE ABOVE STORY IN EDIT 3 FROM A BLACKLISTED SITE ARTICLE WHICH CAUSED THE AUTOMOD TO DELETE THE POST. I hope that the removal of the link fixes the text.
|
||||
|
||||
EDIT 5: It is not my intention to make this community appear as a team of conspiracy theorists. There are some deep implications with the evidence that I've showcased that potentially show deeper interlinking between hundreds of the biggest companies. I couldn't possibly attempt to explain each and every single web, so I leave it to you to continue digging!
|
||||
|
||||
Now back to the post,
|
||||
|
||||
Citadel, BlackRock, Susquehanna, and many others are intricately connected through a variety of sources; namely offshore tax havens as proven through the Panama & Paradise Papers. I attempt to piece together what I believe is the reason we are seeing certain behavior from each of these parties.
|
||||
|
||||
What you're about to read is the amalgamation of multiple pieces of DD by various users from across multiple subs, discord and private discussions in an attempt to piece together what may be happening behind the scenes in the darkside of the financial world.
|
||||
|
||||
Now grab yourself a beer and strap in, this is about to get crazy. 👨🚀👩🚀
|
||||
|
||||
________________________________________________________________________________________________________
|
||||
|
||||
This is an incredibly complicated web with MULTIPLE moving pieces. I will attempt to streamline the findings as much as possible to ease of understanding.
|
||||
|
||||
1. Introduction; Prerequisites
|
||||
|
||||
2. Follow The Money
|
||||
|
||||
3. Let's take a trip to the Cayman Islands and Back Again
|
||||
|
||||
4. The Ugland House
|
||||
|
||||
5. A New Foe Has Appeared
|
||||
|
||||
6. Familiar Faces
|
||||
|
||||
7. What does this mean for apes?
|
||||
|
||||
________________________________________________________________________________________________________
|
||||
|
||||
SECTION 1. INTRODUCTION
|
||||
|
||||
________________________________________________________________________________________________________
|
||||
|
||||
As a prerequisite I highly recommend reading through [/u/atobitt](https://www.reddit.com/user/atobitt) 's "[The EVERYTHING Short](https://www.reddit.com/r/GME/comments/mgucv2/the_everything_short/)" whitepaper. It provides a lot of context as to what's going on under the hood and gets you primed for this post. I'd also highly recommend reading through [/u/pinkcatsonacid](https://www.reddit.com/user/pinkcatsonacid) 's DD "[The Missing 🧩](https://www.reddit.com/r/Superstonk/comments/mlf82b/the_missing_citadels_frenemies_pfof_michael/gtneg3m/?context=3)"; for an understanding of how much deeper this potentially goes. Lastly thank you to [/u/tropicalsecret](https://www.reddit.com/user/tropicalsecret) for helping me hash out some missing pieces and their [investigative work](https://www.reddit.com/r/Superstonk/comments/mnlvhf/here_is_all_the_arms_of_susquehanna/) as well.
|
||||
|
||||
My name is [/u/sharkbaitlol](https://www.reddit.com/user/sharkbaitlol) and over the last couple of weeks or so I've prioritized investigating this story further while putting my consultancy on hold - I feel that this is the start of something bigger than any of us can imagine that can improve ours, and our children's lives. I've prided myself in my career as a data scientist and a lifelong gamer in being able to pick up on patterns. I hope that I'm able to help support our community further with this DD. Special thank you to all those who have contributed their time and expertise to getting us this far. I will be referencing other DD written and hope you understand that even if not mentioned, almost every single DD post written by apes has helped getting us closer to the truth.
|
||||
|
||||
With that being said, lets jump in.
|
||||
|
||||
________________________________________________________________________________________________________
|
||||
|
||||
SECTION 2. FOLLOW THE MONEY
|
||||
|
||||
________________________________________________________________________________________________________
|
||||
|
||||
As we know Susquehanna has been of interest in recent weeks due to their suspicious nature of their position within the GME saga. This suspicion grew quickly when some Redditors pointed out that Dr. Burry may have been pointing a finger at Susquehanna through a hidden message on [Twitter](https://www.reddit.com/r/Superstonk/comments/mlf82b/the_missing_citadels_frenemies_pfof_michael/) (whether this is really what was happening is up to you) - now we have Sus attempting to [appeal new DTCC regulations](https://www.reddit.com/r/Wallstreetbetsnew/comments/mmh5jb/susquehanna_is_sus_part_2_elia_the_occ801_rule/) SR-OCC-2021-003 to make things even weirder. Their growing position prompted me me to start doing a deep dive on their positions across the market; particularly how they've [DOUBLED](https://i.imgur.com/KEE1ZQl.png) in size since the start of the pandemic, parties of association, and conflict of interest across the stock market. What I was able to find has left me baffled at how interconnected all this actually is. Remember this throughout this post, THERE ARE NO COINCINDICES.
|
||||
|
||||
We begin by looking at Susquehanna's filings to the SEC. We're able to figure out that they break down into multiple connections with the following:
|
||||
|
||||
- Susquehanna Investment Group
|
||||
|
||||
- Susquehanna Securities, LLC
|
||||
|
||||
- Capital Ventures International
|
||||
|
||||
- Susquehanna Advisors Group, Inc
|
||||
|
||||
- CVI Opportunities Fund I, LLLP
|
||||
|
||||
- G1 Execution Services, LLC
|
||||
|
||||
- Darby Financial Products
|
||||
|
||||
Now I've highlighted Capital Ventures International (CVI) as this will be our main point of interest of now for the peculiar reason that they're based out of Cayman Islands. You know, that little island of 64k people where Citadel is laundering bonds? Yeah it turns out they're not the only ones, not by a long shot.
|
||||
|
||||
[](https://preview.redd.it/uj4px3tl8hs61.png?width=703&format=png&auto=webp&s=aa693f06904bd495f05e773fbd954c580677b2d5)
|
||||
|
||||
"The ultimate beneficial owners of Susquehanna and CVI are substantially the same". Source: Finra
|
||||
|
||||
You can find the source for the address on BrokerCheck Report [here](https://files.brokercheck.finra.org/firm/firm_35865.pdf) under Finra's website. What they're saying basically saying is that description at the end there, is that Susquehanna Financial and CVI are beneficially owned by the same company (fancy speak for have 25% or more total control of the company); CVI hold around [$839 million.](https://fintel.io/i/cvi-investments)
|
||||
|
||||
________________________________________________________________________________________________________
|
||||
|
||||
SECTION 3. LET'S TAKE A TRIP TO THE CAYMAN ISLANDS AND BACK AGAIN
|
||||
|
||||
________________________________________________________________________________________________________
|
||||
|
||||
Great now that we understand that CVI is in bed with Susquehanna and owned by them; lets go a layer deeper. It's mentioned that this address is located at Winward 1, Regatta Office Park, Grand Cayman, Cayman Islands. I was genuinely curious if this address was even real; after a quick Google search, none other than the PARADISE PAPERS come up. Remember the massive investigation that exposed some of the most powerful leaders to tax havens around the world?
|
||||
|
||||
[Offshoreleaks](https://offshoreleaks.icij.org/) is a pretty amazing website that allows you to do a network visualization to see who's connected with what. So we start digging; *keep in mind that the data from these papers are from 2014 so some names/elements have been slightly modified since then.*
|
||||
|
||||
[](https://preview.redd.it/je2dzgbn8hs61.png?width=1174&format=png&auto=webp&s=c9bc1b50175baaad96fb658ad807da37fd0a8f4b)
|
||||
|
||||
We connected directly to someone named William Walmsley. Source: Offshoreleaks
|
||||
|
||||
You'll notice that Mr. Walmsley comes up a few times throughout this post, but for now we see that he's connected to this address that CVI is registered to. We can confirm his participation in CVI via a 13G FILING through the SEC.
|
||||
|
||||
He's the director of CVI as seen [here](https://www.sec.gov/Archives/edgar/data/1649553/000110465919006973/a19-4181_31sc13g.htm).
|
||||
|
||||
[](https://preview.redd.it/yrsl1u9qchs61.png?width=1341&format=png&auto=webp&s=7fb91baef9bc9b5f159958496da49246d3c4bb2c)
|
||||
|
||||
We see a second address come up in the above screenshot for a place called the "Ugland House" located in the Cayman Islands in this filing associated with CVI. Hold that thought for now, we'll go over it soon.
|
||||
|
||||
Going back our network visualization screen shot with Mr. Walmsley, he leads us to yet another connection called "Apollo Investments" (you'll notice that CVI isn't on that screenshot, this is because the first filings we see for CVI is at the end of year 2017 whereas the Paradise Papers were published prior to that). "Apollo Investments" will be the next piece of the puzzle.
|
||||
|
||||
So who are they? Well we know they manage about $13bn and invest mostly in finance, industrials, and information technology (top buys being SPY puts (oof, there goes a chunk of change)) *[just want to clarify here that Apollo Investments is directly affiliated with Apollo Management, you get redirected on their site to the main Apollo Page].*
|
||||
|
||||
So to recap we know that Mr. Walmsley is located in the Cayman Islands, Director of CVI which is owned by Susquehanna, AND some sort of senior title in a a company called Apollo Investment.
|
||||
|
||||
Now have a look at who are the [majority stakeholders](https://fintel.io/so/us/apo%201%20c38) are of Apollo Global Management:
|
||||
|
||||
[](https://preview.redd.it/opu7bsip8hs61.png?width=981&format=png&auto=webp&s=77e5d78bf2272a6886e22248131749b7e4cd2fc1)
|
||||
|
||||
Hmmm, some familiar faces. Source: Fintel
|
||||
|
||||
Wait... TIGER GLOBAL MANAGEMENT? Hasn't one of the Tiger Cubs associated with them -- you know, just gotten blown up? More on [The Archegos phiasco](https://finance.yahoo.com/news/rattled-archegos-stocks-investable-again-201150296.html) and how they screwed Credit Suisse. How VANGUARD is associated here, I'm not exactly sure yet...
|
||||
|
||||
Remember how I said there's no coincidences? Lets have a look where both APOLLO and TIGER GLOBAL MANAGEMENT are located in New York.
|
||||
|
||||
INTRODUCING THE SOLOW BUILDING
|
||||
|
||||
[](https://preview.redd.it/n0bywa0r8hs61.png?width=852&format=png&auto=webp&s=f32f2f8de1c3b0a12330dd3aab0efa5869b05e3a)
|
||||
|
||||
I can't remember where I saw it, but I believe Mr. Walmsley had something to do with Highland Capital too. I have hundreds of tabs open guys you'll have to give me a pass on this one. Source: Wikipedia
|
||||
|
||||
We'll totally ignore the other tenants for now; although I'm sure they have their hand in the cookie jar haha (cough* Chanel, cough* Bombardier). But lo and behold, one of the largest holders of Apollo are the Tigers which happen to be in the same building. [What a story](https://www.youtube.com/watch?v=ddu4Gj3hmgc) huh.
|
||||
|
||||
________________________________________________________________________________________________________
|
||||
|
||||
SIDE QUEST TIME
|
||||
|
||||
Marc Rowan of Apollo became the new CEO just back in February of this year after the old CEO Leon Black stepped down due to links to "the late financier and convicted sex offender J3FFR3Y 3PST3IN". [WHAT LOL](https://www.reuters.com/article/us-apollo-global-ceo-idUSKBN2AO2XF).
|
||||
|
||||
Rowan was also quoted saying the following during a Credit Suisse Financial Services Forum:
|
||||
|
||||
> "The opportunity, nothing other than that, and in the middle of a pandemic taking a sabbatical is never a good idea," Rowan said during the Credit Suisse Financial Services Forum when asked why he wanted the role.
|
||||
|
||||
[](https://preview.redd.it/usiabvps8hs61.png?width=956&format=png&auto=webp&s=1041a9ba3cdb41004d191f9bf8c308661f95bd0e)
|
||||
|
||||
JUST WHEN YOU THOUGHT IT COULDN'T GET CRAZIER. Source: Reuters
|
||||
|
||||
SIDE QUEST PART 2
|
||||
|
||||
Tiger Global Management's Executive Scott Shleifer in the last month purchased a lovely $132 million dollar Palm Beach house on a piece of land owned by the former President. He also owns 14.8% of Apollo Global Managment:[SEC 13G/A Filing](https://sec.report/Document/0000919574-21-001610/)
|
||||
|
||||
[](https://preview.redd.it/pthryabv8hs61.png?width=629&format=png&auto=webp&s=3338924d3d43eb65d968c23de215b1ff62453790)
|
||||
|
||||
Sounds like someone we know, *cough Ken*. Source: Bloomberg
|
||||
|
||||
HOLD YOUR BREATHE, WE'RE GOING DEEPER
|
||||
|
||||
________________________________________________________________________________________________________
|
||||
|
||||
SECTION 4. THE UGLAND HOUSE
|
||||
|
||||
________________________________________________________________________________________________________
|
||||
|
||||
Let's go back to that other address we saw registered with CVI Investments; we see another business address labelled under a place called the "Ugland House, Grand Cayman, Cayman Islands". I did some more research around this place and SURPRISE, right back to the Paradise Papers we go.
|
||||
|
||||
[](https://preview.redd.it/bn2g8g0y8hs61.png?width=1341&format=png&auto=webp&s=976494dea948c3d3e40f4d253ba889222718f48e)
|
||||
|
||||
This place is so COOL that it has it's own Wikipedia page! <https://en.wikipedia.org/wiki/Ugland_House>
|
||||
|
||||
I love this quote from Wikipedia on it:
|
||||
|
||||
> " During his first presidential campaign, U.S. President [Barack 0bama](https://en.wikipedia.org/wiki/Barack_Obama) referred to Ugland House as "the biggest tax scam in the world", raising questions over the number of companies with a registered office in the building."
|
||||
|
||||
Here's a picture of this monster sized building that houses 40,000 entities and businesses
|
||||
|
||||
[](https://preview.redd.it/juhw8s219hs61.jpg?width=1024&format=pjpg&auto=webp&s=0f8b0ccc24cd7ea9a3c2210c88e74d1c6a0d91d7)
|
||||
|
||||
Where do you think they fit all of them?
|
||||
|
||||
So lets see what's connected to this address
|
||||
|
||||
That EXACT address (Ugland House), is linked to a company called MOUSSESCALE which is owned by Mousse Partners. Guess where their NY office is. 9 West 57th street which is...
|
||||
|
||||
[](https://preview.redd.it/nj3z25g59hs61.png?width=463&format=png&auto=webp&s=98ebad8992d1e1cbe56a0b6ddcb9433850b63324)
|
||||
|
||||
REMEMBER NO COINCIDENCES
|
||||
|
||||
BTW look what's just around the corner of the Solow building
|
||||
|
||||
[](https://preview.redd.it/o709v7na9hs61.png?width=316&format=png&auto=webp&s=de1d7224f0d4276daf5d01c43a3d261b4e085677)
|
||||
|
||||
maybe just a coincidence, New York is a small place
|
||||
|
||||
________________________________________________________________________________________________________
|
||||
|
||||
ANOTHER SIDE QUEST
|
||||
|
||||
Did I also mention that the Chief Investment Officer of Mousse Partner Limited, Suzi Kwon Cohen (can't make this up), was the principal at Credit Suisse in Private Equity? Just 2 floors below Apollo?
|
||||
|
||||
There's also only 44 people that work at Mousse Partners... Man what are the *chances*.
|
||||
|
||||
________________________________________________________________________________________________________
|
||||
|
||||
FUN FACT
|
||||
|
||||
Susquehanna has associations with other "[organization affiliates](https://files.brokercheck.finra.org/firm/firm_35865.pdf) (see "SAL Trading, LLC"; "DARBY FINANCIAL PRODUCTS"; "SIG STRUCTURED PRODUCTS, LLLP") at 1201 N Orange St, Wilmington, DE, USA. You can read all about those shenanigans here: <https://en.wikipedia.org/wiki/Corporation_Trust_Center_(CT_Corporation)>
|
||||
|
||||
Spoiler, it's another tax loophole right in Delaware's backyard with 285,000 separate businesses registered to it.
|
||||
|
||||
EDIT: Some people seem to think this is a null point; it is your opinion on whether you think this is right or wrong even if it's a legal loophole. This location has been linked to 9.5 billion dollars of taxes have been evaded as a result of this location (as of 2012).
|
||||
|
||||
Here's the behemoth of a building that houses 285k businesses.
|
||||
|
||||
[](https://preview.redd.it/f3c09jwd9hs61.jpg?width=2560&format=pjpg&auto=webp&s=78d8ce5409e0fc6c2ef5c39f1f8c526c5acd6edd)
|
||||
|
||||
I hope they have enough parking space for everyone
|
||||
|
||||
I CAN'T BELIEVE I'M SAYING THIS, BUT WE'RE GOING EVEN DEEPER
|
||||
|
||||
________________________________________________________________________________________________________
|
||||
|
||||
SECTION 5. A NEW FOE HAS APPEARED ----- TREAD LIGHTLY, SOME ELEMENTS HERE LIKE THE BLACKROCK -> CITADEL COMPONENTS ARE SPECULATIVE
|
||||
|
||||
________________________________________________________________________________________________________
|
||||
|
||||
Now how is Citadel involved with all this you may wonder? Well as it turns out, they have an entity tied to the Ugland house as well; that's right the same exact building that Apollo and CVI (Susquehanna) are connected to. [[Citadel Kensington Global is a direct subsidiary of Citadel]](https://whalewisdom.com/filer/citadel-kensington-global-strategies-fund-ltd) who are due for another D/A filing sometime in May. They manage a cool 17bn.
|
||||
|
||||
[](https://preview.redd.it/7yerskyg9hs61.png?width=788&format=png&auto=webp&s=449638a65214090de733db68847ab33857716ab7)
|
||||
|
||||
Turns out Citadel is doing some business overseas
|
||||
|
||||
Now we start to getting into [/u/atobitt](https://www.reddit.com/user/atobitt) 's territory of the "EVERYTHING Short" research. They're (Citadel) operating out of multiple places in the Cayman Islands and the Ugland House is the prime destination. They're flipping bonds here and making bank.
|
||||
|
||||
Now GUESS who we build a direct connection to?
|
||||
|
||||
[](https://preview.redd.it/qofbn2hh9hs61.png?width=1870&format=png&auto=webp&s=cdc0cee399c1623e461f81b4924ff514d424bf53)
|
||||
|
||||
Wait a minute, what's BlackRock doing here?
|
||||
|
||||
As it turns out BlackRock is the owner of a company called Swiss Re. Now who's Swiss Re?
|
||||
|
||||
Directly from their [Wikipedia Page:](https://en.wikipedia.org/wiki/Swiss_Re)
|
||||
|
||||
*The Swiss Reinsurance Company of Zurich was founded on 19 December 1863 by the Helvetia General Insurance Company (now known as* [*Helvetia Versicherungen*](https://en.wikipedia.org/wiki/Helvetia)*) in* [*St. Gallen*](https://en.wikipedia.org/wiki/St._Gallen)*,* *the Schweizerische Kreditanstalt (*[*Credit Suisse*](https://en.wikipedia.org/wiki/Credit_Suisse)*) in* [*Zurich*](https://en.wikipedia.org/wiki/Zurich) *and the Basler Handelsbank (predecessor of* [*UBS AG*](https://en.wikipedia.org/wiki/UBS_AG)*) in* [*Basel*](https://en.wikipedia.org/wiki/Basel)*.*
|
||||
|
||||
That's right, Swiss Re was formed by none other than CREDIT SUISSE
|
||||
|
||||
Some more on them:
|
||||
|
||||
They're basically something called a *reinsurer.* In-case you're not familiar:
|
||||
|
||||
*A* *reinsurer* *is an insurance company that insures the risks of other insurance companies. A cedant is an insurer who transfers all or part of a risk to a* *reinsurer**. The* *reinsurer* *covers all the insurance policies coming within the scope of the reinsurance contract.*
|
||||
|
||||
They're the insurance, FOR the insurance. Why is this important? Look who owns them as of 2012 [[BlackRock]](https://ir.blackrock.com/news-and-events/press-releases/press-releases-details/2012/BlackRock-to-Acquire-Swiss-Re-Private-Equity-Partners-AG-Announces-Strategic-Alternative-Investment-Partnership-with-Swiss-Re-Enhances-Private-Equity-Fund-of-Funds-Capabilities-Deepens-Presence-in-Switzerland/default.aspx). I should also mention at this point that Swiss Re manages a cool $240bn in assets as of 2019 - nothing to be scoffed at. Add to the fact that 39% of their investments are in government bonds, and 27% in credit bonds; *directly from their* [investor presentation](https://www.swissre.com/dam/jcr:205daff9-56f9-445f-a2cd-9d3aba31253e/fy-2020-slides-presentation-doc.pdf)*:*
|
||||
|
||||
________________________________________________________________________________________________________
|
||||
|
||||
SECTION 6. FAMILIAR FACES -------- PLEASE NOTE THAT THIS COMPONENT IS PURELY MY SPECULATION ON THE MATTER YET AGAIN; WE CANNOT DEFINITELY SAY FOR CERTAIN THAT THIS CONNECTION BETWEEN BLACKROCK + SWISS RE AND CITADEL + PALAFOX EXISTS. UNFORTUNATELY THE DATA FROM THE PARADISE PAPERS AREN'T RECENT ENOUGH
|
||||
|
||||
________________________________________________________________________________________________________
|
||||
|
||||
Now that we understand who Swiss Re is; INTROOOOOOODUCING OUR BACK-TO-BACK ALL-STAR, PALAFOX TRADING LLC!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!
|
||||
|
||||
Already made infamous in the "EVERYTHING Short" post once again, Palafox has been acting as a direct proxy for Citadel as a means to rehypothecate bonds to quickly cash out and add liquidity to the market.
|
||||
|
||||
Now how do THEY connect? First we see that the public accountant is a company called Pricewaterhousecoopers which work with Palafox. EDIT HERE: Thank you to the community for helping clear this point up. We know that this may be a null conclusion considering PWC works across a multitude of clients across the world. For now all that we can say for certain in this section is that Citadel & BlackRock have registered entities to the Ugland House. Do with that information what you will.
|
||||
|
||||
Now lets zoom out on the network visualization from earlier that connect BlackRock with Citadel through the Ugland House.
|
||||
|
||||
[](https://preview.redd.it/9xf86o4n9hs61.png?width=1435&format=png&auto=webp&s=7fa60032511f78748d3e008455abcfb2c3bb2ee3)
|
||||
|
||||
EDIT: REMOVED SECTION ATTEMPTING TO EXPLAIN THE CONNECTION AS IT WAS TOO SPECULATIVE. JUST KNOW FOR NOW THAT BOTH MEMBERS HAVE ENTITIES ARE REGISTERED TO THE SAME TWO LOCATIONS IN CAYMAN ISLANDS AND BAHAMAS
|
||||
|
||||
________________________________________________________________________________________________________
|
||||
|
||||
SECTION 7. WHAT DOES THIS MEAN FOR APES
|
||||
|
||||
________________________________________________________________________________________________________
|
||||
|
||||
I believe the connection between Susquehanna > CVI > Apollo > Tiger Global Management> Credit Suisse > Swiss Re > Citadel > BlackRock is incredibly complex and has many moving pieces beyond what any of us imagined. I believe that there is a 5D game of chess being played, and apes are just a pawn that is plowing the way to victory. IT IS IN MY OPINION that BlackRock isn't just looking to kill off Mevlin. I think they may be working with the government (which has been shown they've done on occasion) to make some major changes happen to the market. What's the end goal? It's not entirely obvious to me yet.
|
||||
|
||||
As I was compiling this information look for no further than the POTUS himself for confirmation bias just from 3 days ago: SKIP TO 38:20 OR SO <https://twitter.com/potus/status/1379857925875888128?s=21>
|
||||
|
||||
> *I've also proposed a global minimum tax... Let me tell you what the means, that means companies won't be able to hide their incomes in places like the Cayman Islands or Bermuda*
|
||||
|
||||
TLDR; I think there's a lot of shady things going on in the world
|
||||
|
||||
We are approaching something huge apes. Diamond Fucking Hands 💎✋🦍
|
||||
178
DD/Project-Tartarus/Citadel-Has-No-Clothes.md
Normal file
178
DD/Project-Tartarus/Citadel-Has-No-Clothes.md
Normal file
@ -0,0 +1,178 @@
|
||||
Citadel Has No Clothes
|
||||
======================
|
||||
|
||||
**Author: [u/atobitt](https://www.reddit.com/user/atobitt/)**
|
||||
|
||||
[DD](https://www.reddit.com/r/GME/search?q=flair_name%3A%22DD%22&restrict_sr=1)
|
||||
|
||||
EDIT: This is not financial advice. Everything disclosed in the post was done by myself, with public information. I came to my own conclusions, as should you.
|
||||
|
||||
TL;DR - Citadel Securities has been fined 58 times for violating FINRA, REGSHO & SEC regulations. Several instances are documented as 'willful' naked shorting. In Dec 2020 they reported an increase in their short position of 127.57% YOY, and I'm calling bullsh*t on their shenanigans.
|
||||
|
||||
I've been digging into the financial statements of Citadel Securities between 2018 and 2020. Primarily because Citadel Securities *actually* has a set of published financial statements as opposed to the 13Fs filed by Citadel Advisors.
|
||||
|
||||
First... Citadel is a conglomerate.. they have a hand in literally every pocket of the financial world. Citadel Advisors LLC is managing $384,926,232,238 in market securities as of December 2020...
|
||||
|
||||
Yes, seriously- $384,926,232,238
|
||||
|
||||
$295,347,948,000 of that is split into options (calls & puts), while $78,979,887,238 *(**20.52%**)* is allocated to actual, *physical*, shares (or so they say). The rest is convertible debt securities.
|
||||
|
||||
The value of those options can change dramatically in a short amount of time, so Citadel invests in several "trading practices" which allow them to stay ahead of the average 'Fidelity Active Trader Pro'. Robinhood actually sells this data (option price, expiration date, ticker symbol, everything) to Citadel from it's users. Those commission fees you're not paying for? yeah.... think again.. Check out [Robinhoods 606 Form](https://cdn.robinhood.com/assets/robinhood/legal/RHS%20SEC%20Rule%20606a%20and%20607%20Disclosure%20Report%20Q4%202020.pdf) to see how much Citadel paid them in Q4 2020.. F*CK Robhinhood.
|
||||
|
||||
Anyway, another example is Citadel's high-frequency trading. They actually profit *between* the national ask-bid prices and scrape pennies off millions of transactions... I'm going to show you several instances where Citadel received a 'slap on the wrist' from FINRA for doing this, but not just yet.
|
||||
|
||||
Now.... the *"totally, 100% legit, nothing-to-see-here,* *independent**"* branch of Citadel Advisors is Citadel Securities- the Market Maker Making Manipulated Markets. The whole purpose of the DTCC is to serve as an third party between brokers and customers (check out [this video](https://www.youtube.com/watch?v=qtkaMx12otQ) for more on DTCC corruption). I'll bring up the DTCC again, soon.
|
||||
|
||||
Anyway, Citadel Advisors uses their own subsidiary (Citadel Securities) to support their very "unique" style of trading. For some reason, the SEC and FINRA have allowed this, but not without citing them for 58 'REGULATORY EVENTS'.
|
||||
|
||||
So that got me thinking.... "WTF is Citadel actually putting out there for the public to see?" Truthfully, not much... a 12-page annual report called a 'statement of financial condition'.
|
||||
|
||||
Statement of Financial Condition in 2018.
|
||||
|
||||
[](https://preview.redd.it/hk66r3lxdqm61.png?width=830&format=png&auto=webp&s=90edee204e70c476d0b771c19d9b11d1001cd99a)
|
||||
|
||||
The highlighted section above represents *securities sold, but not yet purchased, at fair value* for $22,357,000,000. This is a liability because Citadel is responsible for paying back the securities they borrowed and sold. If you're thinking *"that sounds a lot like a short",* you're correct. Citadel Securities shorted $22 big ones (that's billion) in 2018.
|
||||
|
||||
____________________________________________________________________________________________________________
|
||||
|
||||
Same story for 2019- but bigger: $25,270,000,000
|
||||
|
||||
[](https://preview.redd.it/0ec7aofldqm61.png?width=740&format=png&auto=webp&s=79b5754210abccdc6c30fc07f0ff5de9185047fd)
|
||||
|
||||
____________________________________________________________________________________________________________
|
||||
|
||||
2020 starts to get REALLY interesting...
|
||||
|
||||
Throughout the COVID pandemic, we all heard the stories of brick-and-mortars going bankrupt. It was becoming *VERY* profitable to bet against the continuity of these companies, so big f*cks like Citadel decided to up their portfolio... by 127.57%.
|
||||
|
||||
[](https://preview.redd.it/83uepbgudqm61.png?width=829&format=png&auto=webp&s=7c8b1f1475be0cf61d55f87e29fd282c45833b3c)
|
||||
|
||||
That's right. Citadel Securities upped their short position to $57,506,000,000 in 2020.
|
||||
|
||||
We've all heard Jimmy Cramer's bedtime stories: *"It's important to create a narrative in your favor so that your short position helps drive those businesses into bankruptcy."* Personally, I'm convinced that most of the media hype throughout COVID was an example of this, but I digress.
|
||||
|
||||
EDIT: Credit to u/[JohnnyGrey](https://www.reddit.com/user/JohnnyGrey) for the deeper-dive, here..
|
||||
|
||||
[](https://preview.redd.it/nwght79ayvm61.png?width=870&format=png&auto=webp&s=3bad63929dbaf3449cde0784fce8f98657cd9a32)
|
||||
|
||||
Out of the $32,236,000,000 increase in shorts during 2020, $22,740,000,000 (70.5%) were increases in financial derivatives (options)...
|
||||
|
||||
____________________________________________________________________________________________________________
|
||||
|
||||
Anyway, Citadel shorted another $32,236,000,000 in 2020 and rolled into 2021 with some PHAT $TACK$. Now it's time for a quick accounting lesson; this is where you're going to sh*ted the bed.
|
||||
|
||||
You see the highlighted section below? Citadel (and other companies reporting highly liquid securities) uses 'Fair Value' accounting to measure the amount that goes on their balance sheet (including liabilities like short positions). The cash that Citadel received (asset) was accounted for when the security was sold, but the liability (short) needs to be recorded at the CURRENT MARKET PRICE for those securities while they remain on the balance sheet..
|
||||
|
||||
[](https://preview.redd.it/sxznlzxw3tm61.png?width=726&format=png&auto=webp&s=3943060b3844675b5cc8b165a5371a37bb0f6809)
|
||||
|
||||
At the end of 2020, the 'Fair Value' of their short positions were $57 billion.
|
||||
|
||||
At the end of 2021, however, Citadel will need to adjust the value of those liabilities to their CURRENT market value... Since we don't know the domestic allocation of their short portfolio, you can only imagine the sh*tsunami that's coming for them..
|
||||
|
||||
Take $GME for example....
|
||||
|
||||
We [KNOW](https://wallstreetonparade.com/2021/02/citadel-didnt-just-bail-out-a-gamestop-short-seller-citadel-also-had-a-big-short-position-in-gamestop/) that Citadel "had" a short position in $GME along with Melvin Capital... Can you imagine the damage that [r/wallstreetbets](https://www.reddit.com/r/wallstreetbets/) has done to the other stonks in their portfolio? If Melvin lost 53% in January from this, there's no telling what the current 'Fair Value' of those shorts are..
|
||||
|
||||
____________________________________________________________________________________________________________
|
||||
|
||||
I trust a wet fart more than Citadel, Melvin, and Point 72. [Here's why](https://files.brokercheck.finra.org/firm/firm_116797.pdf).
|
||||
|
||||
This is a FINRA report published in early 2021. It cites 58 regulatory violations and 1 arbitration. After explaining how Ken Griffin basically controls the world through the tentacles of the Citadel octopus, it lists detailed cases and fines that were usually *'neither admitted or denied, but promptly paid'* by Citadel Securities.
|
||||
|
||||
Let me shed some light on a *FEW*:
|
||||
|
||||
1. INACCURATE REPORTING OF SHORT SALE INDICATOR. FIRM ALSO FAILED TO HAVE A SUPERVISORY SYSTEM IN PLACE TO COMPLY WITH FINRA RULES REQUIRING USE OF SHORT SALE INDICATORS. DATE INITIATED 11/13/2020 - $180,000 FINE
|
||||
|
||||
2. TRADING AHEAD OF ACTIVE CUSTOMER ORDERS... IMPLEMENTED CONTROLS THAT REMOVED HUNDREDS OF THOUSANDS OF MOSTLY-LARGER CUSTOMER ORDERS FROM TRADING SYSTEM LOGICS... INTENTIONALLY CREATING DELAYS BETWEEN MARKET MAKERS' TRANSACTIONS WHILE THE UNRESPONSIVE PARTY UPDATED PRICE QUOTES.... NO SUPERVISORY SYSTEM IN PLACE TO PREVENT THIS. DATE INITIATED 7/16/2020 - $700,000 FINE
|
||||
|
||||
3. FAILED TO CLOSE OUT A FAILURE TO DELIVER POSITION; EFFECTED SHORT SALES. DATE INITIATED 2/14/2020 - $10,000 FINE
|
||||
|
||||
4. BETWEEN JUNE 12, 2013 - OCTOBER 17 2017 (YEAH, OVER 4 YEARS) THE FIRM PRINCIPALLY EXECUTED BETWEEN 248 AND 7,698 BUY ORDERS DURING A CIRCUIT BREAKER EVENT; FAILED TO ESTABLISH AND MAINTAIN SUPERVISORY PROCEDURES TO ENSURE COMPLIANCE. INITIATED 1/22/2020 - $15,000 FINE
|
||||
|
||||
5. ON OR ABOUT 11/16/2017, CITADEL SECURITIES TENDERED 34,299 SHARES IN EXCESS OF IT'S NET LONG POSITION (naked short); DATE INITIATED 8/21/2019 - $30,000 FINE
|
||||
|
||||
6. CEASE AND DESIST ORDER ON 12/10/2018: FAILURE TO SUBMIT COMPLETE AND ACCURATE DATA TO COMMISSION BLUESHEET ("EBS") REQUESTS. (BASICALLY FAILED TO PROVIDE PROOF OF TRANSACTIONS TO THE SEC). BETWEEN NOV 2012 AND AUG 2016, CITADEL SECURITIES PROVIDED 2,774 EBS STATEMENTS, ALL OF WHICH CONTAINED DEFICIENT INFORMATION RESULTING IN INCORRECT TRADE EXECUTION TIME DATA ON 80 MILLION TRADES. DATE INITIATED 12/10/2018 - $3,500,000 FINE
|
||||
|
||||
7. TENDERED SHARES FOR THE PARTIAL TENDER OFFER IN EXCESS OF ITS NET LONG POSITION (more naked shorting); FAILED TO ESTABLISH SUPERVISORY PROCEDURES TO ASSURE COMPLIANCE WITH THE RULES. INITIATED 3/22/2018 - $35,000 FINE
|
||||
|
||||
8. IN MORE THAN 200,000 INSTANCES BETWEEN JULY 2014 AND SEPTEMBER 2016, FIRM FAILED TO EXECUTE AND MAINTAIN CONTINUOUS, TWO-SIDED TRADING INTEREST WITHIN THE DESIGNATED PERCENTAGE (scraping pennies between bid-ask) ABOVE AND BELOW THE NATIONAL BEST BID OFFER.... INITIATED 10/13/2017 - $80,000 FINE
|
||||
|
||||
9. ANOTHER CEASE AND DESIST FOR MAJOR MARKET MANIPULATION BETWEEN 2007 - 2010. INITIATED 1/13/2017 - $22,668,268 FINE
|
||||
|
||||
___________________________________________________________________________________________________________
|
||||
|
||||
Quite frankly, I'm tired of typing them. There are STILL 49 violations, and most are BIG fines.
|
||||
|
||||
Naked shorts, failure to provide documentation to SEC, short selling on trade halts..... is this starting to sound familiar? When [r/wallstreetbets](https://www.reddit.com/r/wallstreetbets/) started exposing the truth, they lost the advantage. Now that the DD is coming out about this sh*t, they're getting desperate.
|
||||
|
||||
Let's look at some recent events that occurred with trading halts in $GME. On March 10 2021 (Mar10 Day) we watched the stock rise until 12:30pm when an *unbelievable* drop triggered at least 4 circuit breaker events (probably more but I walked away for a bit).
|
||||
|
||||
[](https://preview.redd.it/00b5hrc96tm61.png?width=359&format=png&auto=webp&s=ac4247e1bf857c4e94d0479b5fe32a8b49c9799a)
|
||||
|
||||
Price drop of 40% in about 25 minutes
|
||||
|
||||
Now... I do not believe retail traders did this.. most importantly, the market was totally frozen for the majority of that 25 minutes. Even if people were putting in orders to sell, there were just as many people trying to buy the dip.
|
||||
|
||||
The volume of shares flooding the market- at the same exact time- was premeditated. I can say that with confidence because several media outlets (mainly MarketWatch) published articles WHILE this was happening, after nearly a week of radio-silence. MarketWatch even predicted the decline of 40% before the entire drop had occurred. When Redditors reached out to ask WTF was going on, the authors set their Twitter accounts to private... slimy. as. f*ck.
|
||||
|
||||
"But wait.... didn't example # 4 say that Citadel was fined $15,000 for selling shorts during circuit breaker events!?"
|
||||
|
||||
Yup! and here are TWO more instances:
|
||||
|
||||
1. CITADEL SECURITIES LLC EFFECTED TRANSACTIONS DURING NUMEROUS TRADING HALTS..
|
||||
|
||||
[](https://preview.redd.it/vt2kmm0t8tm61.png?width=1029&format=png&auto=webp&s=bf02f505ba883bb4b5293b882366407072a54ea8)
|
||||
|
||||
____________________________________________________________________________________________________________
|
||||
|
||||
2: And another...
|
||||
|
||||
[](https://preview.redd.it/egdc1j9z9tm61.png?width=1008&format=png&auto=webp&s=7c174bfc13800becec44bf44fc6aacf0babe4a6e)
|
||||
|
||||
____________________________________________________________________________________________________________
|
||||
|
||||
Think Citadel is alone in all of this? Think again... It's actually been termed- "flash crash".
|
||||
|
||||
$12,500,000 fine for [Merrill Lynch](https://www.sec.gov/news/pressrelease/2016-192.html) in 2016..
|
||||
|
||||
$7,000,000 for [Goldman](https://www.sec.gov/news/pressrelease/2015-133.html)...
|
||||
|
||||
$12,000,000 for [Knight Capital](https://www.sec.gov/news/press-release/2013-222)...
|
||||
|
||||
$5,000,000 for [Latour Trading](https://www.sec.gov/news/pressrelease/2015-221.html)...
|
||||
|
||||
$2,440,000 for [Wedbush](https://www.sec.gov/news/press-release/2014-263)...
|
||||
|
||||
PEAK-A-BOO, I SEE YOU! $4,000,000 for [MORGAN STANLEY](https://www.sec.gov/news/press-release/2014-274)
|
||||
|
||||
____________________________________________________________________________________________________________
|
||||
|
||||
I can't tell who was responsible for the flash crash in $GME last Wednesday; I don't think anyone can. However, to suggest that it wasn't market manipulation is laughable. The media and hedge funds are tighter than your wife and her boyfriend, so spending time on this issue is a waste.
|
||||
|
||||
But what we can do is look at the steps they're taking to prepare for this sh*tsunami. So let's summarize everything up to this point, shall we?
|
||||
|
||||
1. Citadel has been cited for 58 separate incidents, several of which were for naked shorting and circuit breaker flash-crashes
|
||||
|
||||
2. The short shares reported on Citadel's balance sheet as of December 2020 were up 127% YOY
|
||||
|
||||
3. The price of several heavily-shorted stocks has skyrocketed since Jan 2021
|
||||
|
||||
4. Citadel uses 'Fair Value' accounting and needs to reconcile the value of their short positions to this new market price. The higher the price goes, the more expensive it becomes for them to HODL
|
||||
|
||||
We know that Citadel is on the hook for $57,000,000,000 in shorts, but at least they're HODLing onto some physical shares as assets, right?.... RIGHT??
|
||||
|
||||
This should soothe that smooth ape brain of yours...
|
||||
|
||||
[](https://preview.redd.it/mf7j96xmstm61.png?width=726&format=png&auto=webp&s=30a838dadb130c9a815a4866ef403d9c6aafafb7)
|
||||
|
||||
"UHHHHHH ACTUALLY, THE DTCC & FRIENDS OWN OUR PHYSICAL SHARES".....
|
||||
|
||||
Well that's just terrific, because the DTCC just implemented [SRCC 801](https://www.dtcc.com/Globals/PDFs/2021/March/05/SR-NSCC-2021-801) which means they DON'T have your f*cking shares... I've seriously never seen so much finger pointing and ass-covering in my LIFE....
|
||||
|
||||
____________________________________________________________________________________________________________
|
||||
|
||||
I know this post was long, but the story can't go untold.
|
||||
|
||||
The pressure being placed on hedge funds to deliver has never been higher and the sh*t storm of corruption is coming to a head. Unfortunately, the dirty tricks & FUD will continue until this boil ruptures. There are several catalysts coming up, but no one truly knows when the MOAB will blow.
|
||||
|
||||
However, desperate times call for desperate measures and we have never seen so much happening at once. For all of these reasons and more: Diamond. F*cking. Hands.
|
||||
54
DD/Project-Tartarus/Dennis-Kelleher-Testimony.md
Normal file
54
DD/Project-Tartarus/Dennis-Kelleher-Testimony.md
Normal file
@ -0,0 +1,54 @@
|
||||
Dennis Kelleher's testimony is an eye-opening journey on how Robinhood and Citadel exist to fuck you
|
||||
====================================================================================================
|
||||
|
||||
**Author: [u/glide_si](https://www.reddit.com/user/glide_si/)**
|
||||
|
||||
[Discussion](https://www.reddit.com/r/GME/search?q=flair_name%3A%22Discussion%22&restrict_sr=1)
|
||||
|
||||
Listen, I know reading is hard but you owe it to yourself to read his written statement that was given to the congressional finance oversight committee today.
|
||||
|
||||
[Here is the link](https://financialservices.house.gov/uploadedfiles/hhrg-117-ba00-bio-kelleherd-20210317.pdf)
|
||||
|
||||
While most people summit a 2-3 page written statement to congress, Dennis shows up with his BDE and drops this 45 page glorious takedown of Robinhood and Citadel. If you are confused about the Robinhood DD that got posted today and the mechanics of how it works, read it.
|
||||
|
||||
I have quoted some key parts:
|
||||
|
||||
On Profit for Order Flow:
|
||||
|
||||
> In 2020, Robinhood reportedly received $687 million dollars in so-called "rebates" for essentially selling its customer orders to seven high frequency trading firms ("HFTs") that serve as its executing broker-dealers (i.e., the HFTs that execute or facilitate execution of Robinhood's customer orders). These "rebates" or kickbacks, called "paymentfor order flow" ("PFOF"), are used by nearly all of the supposedly "commission-free" retail broker-dealers (e.g., Robinhood, E-Trade, Schwab/TD Ameritrade) who receive a significant volume of securities orders from Main Street investors.
|
||||
|
||||
> In fact, PFOF entrenches approximately seven dominant HFTs that now "internalize" (i.e., execute trades against their own securities inventory and incoming orders) the vast majority, if not almost all, of the retail order flow in the United States. Citadel Securities alone advertises that it trades approximately 26% of U.S. equities volume across 8,900 U.S.-listed equities, executes approximately 47% of all U.S.-listed retail volume, and acts as a specialist or market-maker with respect to 99% of traded volume in 3,000 U.S.-listed options names.25The two largest HFTs involved in PFOF across the markets, Citadel Securities and Virtu Financial, together account for more of the U.S. equities trading market share than the New York Stock Exchange.
|
||||
|
||||
> At any given time, approximately 47 percent of all U.S. stock market volume is traded away from transparent, regulated exchanges (see Figure 3 for figures during the first half of 2020) due to a combination of internalization, trading on alternative trading systems (dark pools), and trading through single-dealer platforms. In certain securities, and at certain times, more than 50 percent of the trading in U.S. equities markets likely occurs in dark markets. Retail trading volume through Robinhood and similar broker-dealers (like E-Trade and Schwab/TD Ameritrade) is internalized by HFTs at far higher rates than this, which means that retail trading representing as much as one-third of total U.S. equities trading volume (depending on the measurement period and securities in question30) essentially never interacts with orders on the securities exchanges.
|
||||
>
|
||||
> Retail trading volume through Robinhood and similar broker-dealers (like E-Trade and Schwab/TD Ameritrade) is internalized by HFTs at far higher rates than this, which means that retail trading representing as much as one-third of total U.S. equities trading volume (depending on the measurement period and securities in question) essentially never interacts with orders on the securities exchanges.
|
||||
>
|
||||
> Obviously, one implication of these facts is that any significant disruption to an HFT like Citadel Securities or Virtu Financial would shake markets and could quite possibly cause significant, widespread dislocations in many securities, if not ignite a catastrophe.
|
||||
>
|
||||
> All of this opaque, needless created complexity enables systematic, secret wealth extraction from the buy side by the sell side. Indeed, this is little more than a destructive multi-billion dollar "hidden tax" (likely significantly exceeding $10 billion) on the execution of retail customer orders.
|
||||
|
||||
On Best Bids and Offers:
|
||||
|
||||
> Despite its name, the NBBO frequently does not even represent the "best" bid or offer available on the public U.S. stock exchanges The lack of odd-lot and other data in the NBBO (National Best Bid Offer) also enables the HFTs and others to inflate and protect their profits by purchasing proprietary data from the exchanges and taking advantage of various forms of privileged access to the securities markets, both of which enable the seven dominant HFT firms to simultaneously, profitably, and regularly trade inside the NBBO in a manner that few others can. PFOF is profitable only because the HFTs are able to share some of the billions of dollars they pocket by claiming price improvement against the NBBO, while trading at prices "inside" of the NBBO and engaging in other inefficient and under-the-radar wealth extraction activities that are beyond the scope of my current testimony.
|
||||
|
||||
[Dark Pools and Retail Trading](https://imgur.com/xXXGRH2)
|
||||
|
||||
On execution of orders:
|
||||
|
||||
> Perhaps not surprisingly, Robinhood is one of the relatively few broker-dealers that have been found by the SEC and FINRA to have engaged in order-routing practices so egregious that they failed a best-execution standard that is almost by design exceedingly difficult to fail.45 Even then, the SEC (1) only charged Robinhood with disclosure violations and not substantive fraud violations, which appear to have been amply supported based on the facts in the SEC's order; and (2) did not charge any individuals, even though facts concerning the conduct of individuals at Robinhood (as identified in the order) would appear to merit consideration of individual charges.
|
||||
|
||||
[How Robinhood's Execution Works](https://imgur.com/x3ip0ma)
|
||||
|
||||
On Robinhood:
|
||||
|
||||
> If Robinhood were interested in democratizing access to the financial markets and creating a level playing field for everyday investors, it would have, at a minimum, explained these irrefutable facts plainly and clearly to its customers, disclosed the true costs of preferential order routing, and shared the derived revenues with its "customer" base. Instead, it has for years used its customers as a product to be sold to its real economic customers---the executing dealers/HFTs that make billions of dollars off of Robinhood's users and who not only share that money with Robinhood but are incentivized to maximize the amount extracted. Presumably, that is why Robinhood not only failed to disclose its practices but apparently engaged in a knowing illegal conspiracy to mislead investors about PFOF, as detailed in the SEC order fining Robinhood $65 million just last December.
|
||||
>
|
||||
> After drawing on six bank credit lines reportedly totaling as much as $600 million, Robinhood reportedly sought an emergency infusion of more than $3.4 billion over four days to prevent further disruptions to trading on the platform.57 In more extreme (but plausible) market conditions, Robinhood may have had more difficulty drawing on its credit lines and/or raising such a significant amount of capital on an emergency basis, particularly at a time when other large market participants would be in dire need of substantial additional capital. If Robinhood defaulted on its margin calls, it could have been forced to more broadly halt trading and/or unexpectedly close out the most volatile positions across as many as 13 million retail accounts, thereby exposing every holder of securities affected by these actions to potentially dramatic changes in prices, liquidity, and order flow.
|
||||
|
||||
On Short Interest and Market Manipulation:
|
||||
|
||||
> Some trading in GameStop and other so-called "Reddit Rebellion" equities was apparently motivated by objections to the short selling activities of institutional traders. There is some transparency with respect to short interests acquired through traditional short selling activities. Market participants frequently rely on put-call, short-interest, and days-to-cover ratios, for example, to gauge market sentiment on valuations, and some of these short-interest measures are informed by bi-monthly reporting by broker-dealers. However, these metrics do not adequately capture the levels of short interest across financial firms or in a sufficiently timely manner. Moreover, these measures do not include the short interests acquired through derivatives that provide leveraged exposures to securities, or baskets of securities, without any purchase or sale of the underlying securities.
|
||||
>
|
||||
> Market participants at the center of these events have for years taken advantage of the complexity they created, the resulting market fragmentation, their order routing schemes, the questionable execution and trading practices, the lack of transparency, and the many uses of seen and unseen leverage.
|
||||
>
|
||||
> As the predatory, and in some cases illegal, practices just discussed illustrate, much of the current market structure has been intentionally created to be as non-transparent and complex as possible to enable and conceal as much wealth extraction as possible.
|
||||
@ -0,0 +1,114 @@
|
||||
Evidence pointing to shorts did not cover pretended they did (via options) to break the squeeze
|
||||
===============================================================================================
|
||||
|
||||
**Author: [u/rainforest11](https://www.reddit.com/user/rainforest11/)**
|
||||
|
||||
[DD](https://www.reddit.com/r/wallstreetbets/search?q=flair_name%3A%22DD%22&restrict_sr=1)
|
||||
|
||||
Long post ahead, but I encourage you to read the whole thing. (This is a re-post, if you previously saw this I would appreciate an upvote for visibility. The previous post got a lot of traction but was removed a mod. I spoke to a mod on the team after and he kindly agreed to approve a re-post.)
|
||||
|
||||
TLDR: Data points strongly point to Hedge Funds using tricks to appear as if they covered their shorts when they haven't truly covered, using an illegal method/loophole to "cover" their shorts with synthetic long shares generated from the use of options. Full version below.
|
||||
|
||||
There's an insightful piece on [TradeSmithDaily](https://tradesmithdaily.com/investing-strategies/the-drop-in-gamestop-short-interest-could-be-real-or-deceptive-market-manipulation/) that identifies two ways for both short interest and price to fall quickly.
|
||||
|
||||
The first scenario is from retail investors not holding the line and panic selling, driving the price down further, releasing into the market more of the float and enabling shorts to cover/buy back shares at progressively lower levels.
|
||||
|
||||
**
|
||||
|
||||
From TradeSmithDaily:
|
||||
|
||||
Plummeting short interest along with a plummeting GME share price, in other words, could indicate that the Reddit army is headed for the hills, and the longs were selling early, giving the shorts a means to cover, as the longs got out... Important to note that if the long holders of GME shares did not break ranks and sell en masse, it would have been impossible for the share price to fall and hedge fund short interest to fall at the same time. because, without a critical mass of long-side holders selling into the market, the hedge funds covering their shorts would have nobody to buy from as they covered (bought back) their short positions.
|
||||
|
||||
**
|
||||
|
||||
The second scenario is where hedge fund short interest in GME didn't really dissipate but instead they played a trick to make it seem like it did, demoralizing the retail side and further "breaking the squeeze."
|
||||
|
||||
**
|
||||
|
||||
From TradeSmithDaily:
|
||||
|
||||
The way the hedge funds could have done this --- made it appear as if they covered their shorts, even when they really didn't --- involves trickery in the options market.
|
||||
|
||||
The tactics involved are not a secret. In fact, the Securities and Exchange Commission (SEC) knows all about such tactics, and published a "risk alert" memo on the topic in August 2013.
|
||||
|
||||
The SEC memo is titled "Strengthening Practices for Preventing and Detecting Illegal Options Trading Used to Reset Reg SHO Close-out Obligations." You can [read it here via the SEC website](https://www.sec.gov/about/offices/ocie/options-trading-risk-alert.pdf).
|
||||
|
||||
The memo contains a dozen pages of highly technical language, but here's a quick rundown:
|
||||
|
||||
- If short sellers are facing a squeeze because shares are hard to buy, or scrutiny for holding an illegal short position, they can create an appearance of having closed their short position through the use of deceptive options trades.
|
||||
|
||||
- A hedge fund that is short a stock can write call options on a stock --- meaning they are now "short" the call options, having sold the call options to someone else (typically a market maker) --- and simultaneously buy shares against the call options.
|
||||
|
||||
- The shares bought against the call options could be "synthetic" longs --- meaning they are not part of the original share float of the stock --- as sold to the hedge fund by the market maker that takes the other side of the options trade.
|
||||
|
||||
- This works because, if a market maker buys options from an options writer, the market maker has legal privileges to do a version of "naked shorting" as part of their hedging function. This is necessary, under the current rules and the current system, for market makers to protect themselves when facilitating options trades.
|
||||
|
||||
- As a result of the above transaction, the hedge fund that sold short calls was able to buy synthetic long shares against the calls. (A synthetic share is one that has a long on one side and a short on the other but wasn't part of the original float.) The synthetic long shares are the other side of the naked shorts, legally initiated by the market maker, so the market maker can hedge.
|
||||
|
||||
- The hedge fund that bought the shares can now report that they have "bought back" their short position via buying long shares --- except they actually haven't! The synthetic shares they bought are canceled out against the short call positions they initiated, a necessity of the maneuver by way of the market maker's hedging of the call position they bought from the hedge fund.
|
||||
|
||||
It gets very complicated, very fast. But the gist is that hedge funds can use tricks to make it look like they've covered their shorts --- even if they haven't truly covered, and can't, for lack of available float --- by way of exploiting loopholes that exist due to an interplay of reporting rule delays, market maker naked shorting exceptions, and legal practices of synthetic share creation (new longs and shorts made from thin air) relating to market-making.
|
||||
|
||||
Below is a section of the SEC memo (from page 8) that gets to the heart of it:
|
||||
|
||||
*"Trader A may enter a buy-write transaction, consisting of selling deep-in-the-money calls and buying shares of stock against the call sale. By doing so, Trader A appears to have purchased shares to meet the broker-dealer's close-out obligation for the fail to deliver that resulted from the reverse conversion. In practice, however, the circumstances suggest that Trader A has no intention of delivering shares, and is instead re-establishing or extending a fail position.*"
|
||||
|
||||
**
|
||||
|
||||
In short (no pun intended) these tricks "help hedge funds maintain short positions that, legally speaking, they weren't supposed to have because the shares were never properly located". Which triggers alarm bells when we consider the extraordinarily high amount of FTIDs/Failed to Deliver Shares (<https://wherearetheshares.com/>) and Michael Burry's (now deleted tweet viewable here <https://web.archive.org/web/20210130030954/https://twitter.com/michaeljburry?lang=en>) about how when he called back shares he lent out, brokers took weeks to actually find them with the implication they could not be located.
|
||||
|
||||
These factors lend credence to the idea that shorts weren't really covered but were given the impression of being covered with trickery using options, in order to "cover" short positions they shouldn't have had to begin with because shares were never properly located.
|
||||
|
||||
If this is true, and as explained there are signs that indicate it is, this would allow short side funds to prolong their short positions indefinitely. This inspires a thought experiment, if funds are able to prolong their short positions with this method, wouldn't it make more financial sense for them to prolong their shorts rather than truly cover and close out their shorts at a -500% to -5000% loss when prices were at 300-400 last week (when they supposedly closed out a majority/large amount of short positions)? The saying for stocks goes "its only a loss when you sell." The version for shorts would be "its only a loss if you close out your short positions."
|
||||
|
||||
Another factor to consider is there are well reasoned posts [here](https://www.reddit.com/r/wallstreetbets/comments/ledjwa/how_there_is_no_mathematical_way_shorts_were/) and [here](https://pastebin.com/AuhuKJu4) (now a pastebin, originally a popular post from a reddit user) that present the argument that, mathematically speaking, shorts could not have afforded to truly cover the majority of their positions. Based on this logic, if shorts could not have afforded to truly cover most of their positions, it may have made the most sense for shorts to only cover their most underwater positions and prolong the majority of remainder shorts positions with the help of synthetic longs. The end goal being to wait for retail interest and stock price to go back down before truly closing all their positions (though FTID/phantom shares caused by the synthetic longs may be another complication for shorts to close their positions.)
|
||||
|
||||
In addition, one point that may be relevant to explore is if a large amount of short positions were indeed truly covered, there would theoretically be immensely strong buy pressure to drive the price of the stock up. Instead, during this past week when shorts supposedly covered, price of the stock somehow went into a free fall. Why? Something to think about.
|
||||
|
||||
I would be remiss to mention that another data point that may be of significance is that an entity recently purchased 43 million dollars worth of 800 dollar call options to expire in March ([screenshot from a WSB post](https://preview.redd.it/b21gob6z5ze61.png?width=1788&format=png&auto=webp&s=615555f4e98da988c49a89ea5991d6c7063ff7a9)). In practical terms what this purchase may seem to indicate is that whoever made the purchase believes there's a chance and risk the price of the stock could shoot past 800 by March, which would also suggest that they believe a squeeze is still possible and are hedging for it. If you happen to believe this entity is a hedge fund then you may draw your own inferences from that as to what that could mean.
|
||||
|
||||
In considering the potential use of synthetic longs by shorts to prolong their positions we must also consider the possibility that shorts may no longer be under as much pressure as they were before to cover. What can retail investors do in that case? Two thoughts come to mind.
|
||||
|
||||
A) One recourse retail investors could have would be to encourage GME to issue a reverse stock split as it forces borrowers to return shares back to their holders, which in theory would put the naked short sellers in a compromised position. If you care about forcing the issue, you can follow the instructions [here](https://www.reddit.com/r/wallstreetbets/comments/lcpwh0/how_gme_can_still_be_a_great_play/gm2tsnw/)
|
||||
|
||||
B) Another recourse would be to bring the matter to the SEC's attention for investigation, which you can do at <https://www.sec.gov/tcr>
|
||||
|
||||
Sidenote: On the subject of synthetic long shares, another instance where they came into the story recently was when S3 Partners released it's GME short interest % calculations last week, from a short interest from on 122% on 1/28 Thursday to 113% on 1/29 Friday) to 55% on 1/31 Sunday, which many found to be suspicious. Later it was discovered that number of 55% was calculated using the same data set that yielded 113% short interest percentage, but with the significant difference of including synthetic long shares into the short float equation, which is against standard practice but which S3 abruptly decided on Sunday to make their new main metric of SI%. Many questioned the logic and timing of this decision. One consequence of this decision was that the media picked up on the "new" short interest percentage of 55% and spread it as a new narrative during market open on the morning of 2/1 Monday. Whether this influenced subsequent buy/sell behavior, and if so to what degree, is something to consider.
|
||||
|
||||
If you think about GME as a battle between short side funds and retail investors (there are likely other players involved but for the purpose of this analysis we'll focus on these two), information plays a major role and there is an information asymmetry on the retail investor's side. For example, hedge funds know the positions they're in and can share data with each other whereas retail investors are in the dark about many important data points. An example of an information asymmetry on the retail investor's side is the unavailability and general inaccessibility of true real-time short interest percentage. A lot of retail investors are waiting for the short interest report on February 9th to help inform them of their next moves, but while this report is a data point, the data in the report will still be two weeks old. With that said, examples of what investors have available for estimating the immediate short term interest are things like short interest borrow rate and calculated inferences from other data points.
|
||||
|
||||
There's an adage oft repeated on WSB that retail investors can stay "retarded" longer than funds can stay solvent. The "paper hand" sell off earlier this week in part appears to contradict that statement. To explore it from a different perspective, if you consider the possibility that short side funds are taking a long term play (on their short positions by extending them with synthetic long shares), then so far it would seem that funds can stay solvent longer than paper hands can stay patient (case in point being the retail sell-off when the price started dropping.)
|
||||
|
||||
At least one lesson that could be draw from this is that the better retail investors understand how hedge funds think and operate, the better it will benefit them in navigating this situation intelligently. An analysis of events of the the past week leads me to believe hedge funds deployed at least three tactics from the Art of War:
|
||||
|
||||
- "Deceiving and confusing the enemy is a more effective path to victory than openly fighting with them." I personally believe the press release from Melvin Capital on 1/27 about closing their short positions was an example of this, they wanted us to believe their short positions were closed thus ending justification for the short squeeze.
|
||||
|
||||
- "If you know your enemies and know yourself, you will not be imperiled in a hundred battles." Hedge funds knew the weakness of the retail side was the lack of cohesion and leadership (by nature the lack of leadership was a disadvantage for any leader to the movement may be accused of manipulating retail buyers and scapegoated) and they knew that if price drops low enough many retail buyers will panic sell, so all they needed to do was attempt to drive the price down via whatever methods at their disposal whether thats through misinformation, calculated and continuous shorting, short ladder attacks ([read this for an explanation on how 'counterfeit shares', which are a form of synthetic shares created from naked shorts, can be used to ladder attack the stock price](https://www.reddit.com/r/wallstreetbets/comments/lf4vn3/yes_laddering_is_real_short_ladder_attack_is_just/), which also supports the thesis of large amounts of counterfeit shares currently being in play) and other potential methods.
|
||||
|
||||
- "If his forces are united, separate them" aka divide and conquer. Upon driving "weak-hands" to sell-off this divides the retail buying group and creates bears out of some "paper hands", who then spread their views and further the divide. Another example is the silver fake news/manipulation and the very real possibility of bots sent into this sub to push a message and sow division.
|
||||
|
||||
I will leave you with that, and a reminder to do your own research, for as investors we do not have all the information available, and the most we can do is intelligently speculate with as much data and logic as we can gather. I wrote this post because I spotted some inconsistencies within the GME stock that in my opinion, once brought to awareness, would either be irresponsible or willfully ignorant to not examine further. If you agree with the ideas explored in this post, feel free to share with whomever you'd like, and thank you for your part in raising awareness.
|
||||
|
||||
*To provide context for the timeline of events described in this post, this post was originally written on Thursday 2/4/21 and updated on Sunday 2/7/21.*
|
||||
|
||||
*For liability purposes, everything in this post is simply a thought experiment. I am not a financial advisor and no part of what is written constitutes as financial advice.*
|
||||
|
||||
If you'd like to read more into the subject of synthetic long shares and how it could be currently misused in the context of GME:
|
||||
|
||||
<https://www.reddit.com/r/wallstreetbets/comments/ldjbg1/analysis_on_why_hedge_funds_didnt_reposition_last/>
|
||||
|
||||
<https://www.reddit.com/r/wallstreetbets/comments/lalucf/i_suspect_the_hedgies_are_illegally_covering/>
|
||||
|
||||
<https://www.reddit.com/r/wallstreetbets/comments/l97ykd/the_real_reason_wall_street_is_terrified_of_the/>
|
||||
|
||||
<https://www.reddit.com/r/wallstreetbets/comments/lanf94/gme_is_a_time_bomb_and_its_highlighting_a_severe/>
|
||||
|
||||
<https://www.reddit.com/r/wallstreetbets/comments/lag1d3/why_gme_short_interest_appears_to_have_fallen/>
|
||||
|
||||
<https://www.reddit.com/r/wallstreetbets/comments/l9rk78/sec_doj_60_minutes_public_data_suggests_massive/>
|
||||
|
||||
<https://www.reddit.com/r/wallstreetbets/comments/l9z88h/evidence_of_massive_naked_short_selling_fraud_in/>
|
||||
|
||||
<https://www.reddit.com/r/wallstreetbets/comments/lbydkz/s3_partners_s3_si_of_float_metric_is_total/>
|
||||
|
||||
For another perspective on why the squeeze has not squoze you can read [this](https://www.reddit.com/r/wallstreetbets/comments/le235t/gme_institutions_hold_177_of_float_why_the/)
|
||||
@ -0,0 +1,82 @@
|
||||
Evidence of Massive Naked Short Selling Fraud in GME and AMC
|
||||
============================================================
|
||||
|
||||
**Author: [u/MagicBobert](https://www.reddit.com/user/MagicBobert/)**
|
||||
|
||||
[DD](https://www.reddit.com/r/wallstreetbets/search?q=flair_name%3A%22DD%22&restrict_sr=1)
|
||||
|
||||
First of all, major credit to [u/johnnydaggers](https://www.reddit.com/u/johnnydaggers/) for the [original DD](https://www.reddit.com/r/wallstreetbets/comments/l97ykd/the_real_reason_wall_street_is_terrified_of_the/) If you haven't read that yet, go take a look.
|
||||
|
||||
Inspired by his analysis, I wanted to investigate the SEC's publicly available Failed to Deliver data and see how it compared to other companies over time.
|
||||
|
||||
I wrote some code to process the the raw SEC data and normalize the shares that failed to deliver by the total number of outstanding shares of the company. This gives us a view that where each company's FTD shares are expressed as a percentage of the outstanding, so we can fairly compare companies to one another.
|
||||
|
||||
(Before you ask, yes I account for fluctuating values of outstanding shares.)
|
||||
|
||||
I went back to the beginning of 2019, looking at a few of the recent meme stocks with short squeezes as well as the top 10 (by weight) in the S&P 500 as well as GE (as an example of a stock with very low short interest). Here's what I found.
|
||||
|
||||
[](https://preview.redd.it/9us7kdme1ue61.png?width=2554&format=png&auto=webp&s=ddf843285adac642c3d15360c71e14ed04566a38)
|
||||
|
||||
This is not normal.
|
||||
|
||||
Shares can fail to deliver for many reasons, but when large numbers of shares fail to deliver a likely explanation is naked short selling. For a thorough explanation of this, see [this article](http://counterfeitingstock.com/CS2.0/CounterfeitingStock.html).
|
||||
|
||||
Back in early 2019, both GME and AMC look like the others. All had sub-1% of their outstanding shares end up as FTD. But starting in mid 2019, both GME and AMC experienced three waves of progressively larger naked short selling attacks. This is known as [scaling in](https://www.investopedia.com/terms/s/scale-in.asp).
|
||||
|
||||
I wanted to see if I could find corroborating evidence of news and price data which aligned in time with these waves of naked shorting. What I found were two stories, both similar, explaining how GME and AMC got to where they are today.
|
||||
|
||||
GameStop
|
||||
|
||||
The first wave (small bet) of naked shorts occurred in June and July of 2019. GME reported Q1 '19 earnings on June 4th after hours, with a [bleak future outlook](https://www.washingtonpost.com/business/2019/06/05/gamestop-stock-plunges-nearly-percent-gamers-brace-new-era-consoles/). Overall sales was down $1.5B, net income plunged by 78%. This story is what formed the core of the bear thesis. The stock dropped 36% on the news.
|
||||
|
||||
[](https://preview.redd.it/vbrosels1ue61.png?width=2804&format=png&auto=webp&s=b04f103567aa52b8af929191f14fbae86a41f0e4)
|
||||
|
||||
GME Q1 '19 Earnings. Oof.
|
||||
|
||||
But things changed when Q2 '19 earnings came around. Yes, sales were down again and the numbers didn't look good, but the company announced it was going to [reboot with a major strategic update](https://www.globenewswire.com/news-release/2019/09/10/1913815/0/en/GameStop-Reports-Second-Quarter-Fiscal-2019-Results.html). They were going to make their retail stores more efficient by closing some locations, focus on becoming a social hub for gaming, and build a digital platform around the relaunched GameStop website.
|
||||
|
||||
Investors liked the news and the stock tries to move upwards, but is repeatedly beaten down. This lines up with the second wave of naked shorting. The original short sellers couldn't let the price float up, so they resorted to more than doubling down on their original naked short bet to keep the stock trending downward.
|
||||
|
||||
[](https://preview.redd.it/p6x5x8zw1ue61.png?width=2772&format=png&auto=webp&s=382b78b87a737dc480f85bccea573096ca681706)
|
||||
|
||||
Naked Shorts double down, gotta drive it to zero faster than they can rebuild!
|
||||
|
||||
Finally COVID hits the US in March and April. Lockdowns happen and it becomes clear that nobody is going to malls anytime soon. This is where the third and final massive wave of naked short selling happens, attempting to push GME into bankruptcy. Remember, that's always the goal with naked short selling. If the company goes bankrupt, especially with a convenient parallel story ("It was a failing company anyway and COVID was the nail in the coffin!"), then nobody bothers to look into how many counterfeit shares might be floating around out there. They aren't worth anything, so who cares!
|
||||
|
||||
At its peak, over 20% of the company's entire outstanding shares were failing to deliver every month. This is confirmed by a tweet from Michael Burry (since deleted, he scrubs his tweets) that says when he tried to recall his lent-out shares, it took his broker many weeks to locate them. Remember, companies normally have well below 1% of their outstanding shares fail to deliver every month.
|
||||
|
||||
AMC Entertainment
|
||||
|
||||
To understand how we got here with AMC, you need to look back further, to 2017. AMC has been struggling to be profitable for a while. They had a history of posting very small net profits along with many net losses. Their cash on hand was hovering around $300M and their corporate borrowing had been going up.
|
||||
|
||||
[](https://preview.redd.it/g7zugy792ue61.png?width=1876&format=png&auto=webp&s=f580cf12bad13197ed1426466d8b183a4191933e)
|
||||
|
||||
Trying to hard to not lose money.
|
||||
|
||||
[](https://preview.redd.it/jtgjqlu92ue61.png?width=1876&format=png&auto=webp&s=93a8ac04fd426390354024ce016a2a08df36c79f)
|
||||
|
||||
Surely borrowing will make this problem go away!
|
||||
|
||||
What coincided with the first small naked short bet on AMC in June/July of 2019? Their cash on hand just dipped below $200M (from being stable around $300m). The last time that happened, AMC more than doubled its corporate loans. The short hedge funds smelled blood in the water.
|
||||
|
||||
The second bet, where the naked shorts doubled down occurred in November of 2019. What happened then? AMC Q3 earnings, which showed that cash on hand had dropped to a precipitous $100M. Bankruptcy was in sight for the hedge funds...
|
||||
|
||||
And then COVID hit. Their massive third wave bet was similar to GameStop, though slightly more delayed. Why? May 2020 was the peak of naked short selling, around the time when some businesses were able to reopen with restrictions, but it was clear that movie theaters, among a few other things, would be staying closed until the pandemic was completely over.
|
||||
|
||||
Also like GameStop, at its peak over 20% of the company's outstanding shares were failing to deliver. This is not normal.
|
||||
|
||||
Conclusion
|
||||
|
||||
I think the evidence shows there is a strong reason to believe that one or more hedge funds, probably in collusion with broker dealers or the DTCC, have been deliberately naked short selling both GME and AMC since mid-2019. They made small bets to start with in the first wave, doubled down a few months later, but stupidly went all-in for the kill when COVID hit the US. It presented a unique scapegoat that nobody would question for pushing a failing mall retailer and a dwindling movie chain out of business.
|
||||
|
||||
Where does this leave us? I don't know. Unless this results in some kind of economic crisis (and I'm beginning to think it will), I don't see anything getting seriously investigated or changing. This is the same crap that happened with Fannie Mae and Freddie Mac in 2008, but nobody was went to jail for it. Of course they were going to keep doing it.
|
||||
|
||||
This is not financial advice. I eat crayons and paste.
|
||||
|
||||
Positions: 100 GME @ $36, 500 AMC @ $2.75 (but I wrote $3 calls before it mooned... GUH)
|
||||
|
||||
If anyone wants to play around with the code or data I used to generate the first plot (monthly normalized failure to deliver data), [I put it on GitHub](https://github.com/bobsomers/evidence_of_naked_short_fraud_in_gme_and_amc).
|
||||
|
||||
**References**
|
||||
- https://www.stonking.info/post/evidence-that-gme-shorts-are-not-covering
|
||||
- https://tradesmithdaily.com/investing-strategies/the-drop-in-gamestop-short-interest-could-be-real-or-deceptive-market-manipulation/
|
||||
@ -0,0 +1,86 @@
|
||||
FINTEL Short Data Altered for GME & AMC
|
||||
=======================================
|
||||
|
||||
**Author: [u/TowelFine6933](https://www.reddit.com/user/TowelFine6933/)**
|
||||
|
||||
UPDATED ON FEB 16, 2021
|
||||
|
||||
PLEASE FEEL FREE TO REPOST, SHARE, LINK OR WHATEVER. JUST SPREAD THE WORD!
|
||||
|
||||
After reading this post by [u/RubinoffButtChug69](https://www.reddit.com/user/RubinoffButtChug69/):
|
||||
|
||||
<https://www.reddit.com/r/Wallstreetbetsnew/comments/lflhz4/fintel_altered_short_volume_data_for_gme/>
|
||||
|
||||
I sent an email to FINTEL asking why the Short data had been altered by 50% for GME & AMC for the past 10 trading days.
|
||||
|
||||
This was the response:
|
||||
|
||||
[](https://preview.redd.it/5o5ek0bopcg61.jpg?width=1262&format=pjpg&auto=webp&s=8dd26504acbe7b12be1556908f237f23266fc419)
|
||||
|
||||
Response #1
|
||||
|
||||
I then sent a followup email:
|
||||
|
||||
[](https://preview.redd.it/9mdgo102ocg61.jpg?width=1264&format=pjpg&auto=webp&s=92e3637f6c4c6ab6ec57aa272c951298e60a05df)
|
||||
|
||||
E-Mail #2
|
||||
|
||||
This is the response:
|
||||
|
||||
[](https://preview.redd.it/xl1a2gsbocg61.jpg?width=1264&format=pjpg&auto=webp&s=be6e72e78b04c8c1f84b0310751904b0dc2791b7)
|
||||
|
||||
Response #2
|
||||
|
||||
Seriously?!? The reporting agency for the largest financial trading system in the world made a boo-boo which goes back an entire fucking year!?!? (2020 really was shit, wasn't it?)
|
||||
|
||||
If the programming error existed for 72 hours from Friday to Saturday, why was data for the past 10 trading days (and, mebbe, the whole year) impacted?
|
||||
|
||||
This is the organization that is responsible for reporting ACCURATE data that BILLION dollar decisions are based on. They are either lying or incompetent.
|
||||
|
||||
SEC I know you are watching us on here. WTF is going on?!?
|
||||
|
||||
____________________________________________
|
||||
|
||||
EDIT: 2/9/2021 10:26 EST
|
||||
|
||||
Some more info: <https://www.reddit.com/user/RubinoffButtChug69/comments/lg29co/extensive_dd_into_fintel_short_volume_alterations/?utm_source=share&utm_medium=ios_app&utm_name=iossmf>
|
||||
|
||||
FYI - This was posted to WSB and was removed in less than 15 minutes.
|
||||
|
||||
______________________________________________
|
||||
|
||||
EDIT: 2/16/2021 03:12 EST
|
||||
|
||||
In response to the above, I sent this email on Feb 9:
|
||||
|
||||
[](https://preview.redd.it/eo6ww5gxssh61.jpg?width=1268&format=pjpg&auto=webp&s=f59f8221c638e3b867a053410559d256f1b15378)
|
||||
|
||||
E-mail #3
|
||||
|
||||
Finally, even though I received my other responses within a matter of hours, this is the response I received on Feb 15:
|
||||
|
||||
[](https://preview.redd.it/warsdrfttsh61.jpg?width=1271&format=pjpg&auto=webp&s=5c5cd1effb216197cc9bc2731e5d1140bfe2d97f)
|
||||
|
||||
Response #3
|
||||
|
||||
As you can see, none of the questions were addressed. The response was completely blank. They had simply changed the status of my inquiry to "Resolved". I clicked on the "View Request" link and, through the FINTEL site, asked them to respond to the questions. I received the following at 10:39 pm on Feb 15:
|
||||
|
||||
[](https://preview.redd.it/dgimv36atsh61.jpg?width=1266&format=pjpg&auto=webp&s=f1c7d1db61dba4308f65685509d52d0f3e22f248)
|
||||
|
||||
Response #4
|
||||
|
||||
There are several things about this response that I find interesting:
|
||||
|
||||
1. They claim they responded to my earlier questions "in the spirit of being transparent" yet are now refusing to continue to be transparent and answer any questions.
|
||||
|
||||
2. The openly admit that they are fully aware of the posting activity here on /GME. This begs the question: Why? Why on earth would FINTEL be concerned about a bunch of delusional GameStop bagholders spouting conspiracy theories about intentionally altered short data and manipulated stock markets? Unless....
|
||||
|
||||
3. They claim they will not be taking anymore time from "legitimate tickets" thus implying that my questions are illegitimate. I can't help but wonder if they would say the same thing to Congress?
|
||||
|
||||
4. Wilton Risenhoover (the founder of FINTEL) was the responder to my first two emails. These responses come from an "Aqua R". I am not sure who he is, perhaps a lawyer? Again, I can't help but wonder why my old buddy Wilton didn't answer.
|
||||
|
||||
5. Aqua R refers to Mr. Risenhoover as "The Founder". This just made me laugh. "The Founder"? And they say *we* are like a cult!
|
||||
|
||||
I plan to resubmit my questions and point out that I still do need help with "actual use of [their] site". After all they claim to offer "Institutional Grade Research Tools" to help you "Dominate the Financial Markets" with "more accurate data" for "better decisions". Yet, I am still not sure what numbers I can rely on. They discovered a "programming error". What if there are other errors in the data that have yet to be discovered? I probably won't get a response since they seem to be circling the wagons, but I can try.
|
||||
|
||||
Any ideas for additional questions are welcome. Or, please feel free to send them questions of your own. They can be reached at <support@fintelio.atlassian.net>.
|
||||
16
DD/Project-Tartarus/KBRA-has-Direct-Ties-to-Citadel.md
Normal file
16
DD/Project-Tartarus/KBRA-has-Direct-Ties-to-Citadel.md
Normal file
@ -0,0 +1,16 @@
|
||||
Some fun info about Citadel's bonds and their in-pocket ratings agency 💎🙌🚀
|
||||
=============================================================================
|
||||
|
||||
**Author: [u/Broviet](https://www.reddit.com/user/Broviet/)**
|
||||
|
||||
[DD](https://www.reddit.com/r/GME/search?q=flair_name%3A%22DD%22&restrict_sr=1)
|
||||
|
||||
Even BBB- struck me as a little high, so I wanted to look into this fine little "ratings agency" (KBRA).
|
||||
|
||||
<https://www.sec.gov/news/press-release/2020-235>
|
||||
|
||||
Bought and paid for, y'all.
|
||||
|
||||
I'm sure one of the primary seed investors in KBRA (<https://www.crunchbase.com/funding_round/kroll-bond-rating-agency-series-c--a622374e>) having direct ties to Citadel and Interactive Brokers has nothing to do with this 😒
|
||||
|
||||
<https://www.securitiesfinancetimes.com/securitieslendingnews/article.php?article_id=218689> (look for Bessemer Venture Partners and Rob Stavis).
|
||||
@ -0,0 +1,56 @@
|
||||
Fintel Changed Their Short Volume Data After My Last Post, and I Have The Receipts To Prove It. (GME) Mods Stop Deleting This
|
||||
=============================================================================================================================
|
||||
|
||||
**Author: [u/RubbinoffButtChug69](https://www.reddit.com/u/RubbinoffButtChug69/) via [u/moo-va-long](https://www.reddit.com/user/moo-va-long/)**
|
||||
|
||||
Fellow Apes, you may remember me from my post on Friday analyzing [why hedge funds couldn't have repositioned on the 28th, and why they couldn't have covered on the 29th](https://www.reddit.com/r/wallstreetbets/comments/ldjbg1/analysis_on_why_hedge_funds_didnt_reposition_last/?ref=share&ref_source=link). My post gained a lot of interest and I am glad you all appreciated my analysis.🦍
|
||||
|
||||
Last night something interesting was brought to my attention, and I think you guys might want to take a look. After the post gained popularity on the 6th, Fintel significantly altered their short volume data.🚀
|
||||
|
||||
[Fintel GME Short Volume Data Screencap from the 6th](https://imgur.com/a/TiI74zM)
|
||||
|
||||
[Fintel GME Short Volume Data Screencap from the 7th](https://imgur.com/a/pXvXEN6)
|
||||
|
||||
As you can see, they changed the data, seemingly for no reason, on the 7th. What's interesting is that all of short volume data specifically was REDUCED BY HALF
|
||||
|
||||
I was curious if this was simply a normal thing for them to do, to alter data randomly on weekends, so I checked Tesla data to see if it was also reduced. It was not.
|
||||
|
||||
[Fintel TSLA Short Volume Data from the 28th](https://imgur.com/a/NEChJTk)
|
||||
|
||||
[Fintel TSLA Short Volume Data from the 7th](https://imgur.com/a/77eAhMG)
|
||||
|
||||
As you can see, all of the GME short volume data was reduced by half on the 7th, but none of the TSLA data was reduced. Why would that be?
|
||||
|
||||
Well, the same thing was done for AMC.
|
||||
|
||||
[Fintel AMC Short Volume as of the 6th](https://imgur.com/a/0frCcji)
|
||||
|
||||
[Fintel AMC Short Volume as of Today](https://imgur.com/a/jVOvqsL)
|
||||
|
||||
AMC reduced by 50%
|
||||
|
||||
But not for Apple
|
||||
|
||||
[Fintel AAPL Short Volume as of the 28th](https://imgur.com/a/ec41CAY)
|
||||
|
||||
[Fintel AAPL Short Volume as of Today](https://imgur.com/a/YCSYiRe)
|
||||
|
||||
Honestly, all I can say is very sloppy Fintel, very sloppy.
|
||||
|
||||
We caught you with your hand in the cookie jar, and now we know that you and likely several other financial intelligence sources are manipulating data.
|
||||
|
||||
I guess the analysis from my original post was pretty spot on for you guys to go and start altering all of the data. Fortunately, I always keep the receipts.
|
||||
|
||||
Why would hedge funds be going nuclear with media FUD, disinformation campaigns and bots? Why would seemingly reliable sources of financial data be altering specific data for tickers that gain public attention? Why do they need you to believe that they covered?
|
||||
|
||||
Thank you to [/u/moo-va-long](https://www.reddit.com/u/moo-va-long/) for bringing this to my attention.
|
||||
|
||||
Here are some additional sources of people talking about this, [1](https://youtu.be/uJuHEsemSqo),[2](https://twitter.com/TradesTrey/status/1358620225500020740?s=19)
|
||||
|
||||
TLDR: Just read it guys, this one was quick. Fintel was caught red handed altering their short volume data for stocks like GME and AMC, but not for stocks like TSLA and AAPL. I have provided the receipts and it is clear what they have done. Think critically about every piece of data you come across, because they are trying to cover their tracks, start keeping your receipts.
|
||||
|
||||
Disclaimer: I am not a financial advisor, nor am I licensed or in any way qualified to dictate or advise your trading decisions. This is not financial advice. This analysis is not meant to influence, inspire, or inform you regarding your trades. This analysis was written purely as speculation and could be entirely incorrect. I found my own analysis interesting and wanted to share my unprofessional opinion. Furthermore, while these numbers are accurate as per their sources, they may not account for other factors that relate to the stock's activity. I own shares of GME, TSLA and AAPL.
|
||||
|
||||
Monke Storng 🦍🚀🦍🚀🦍🚀
|
||||
|
||||
Edit: To all those who find this post, I have tried posting this information to WSB several times but it seems to be automatically removed every time. I will continue trying to post so keep your eyes out. If you are able to post this WSB yourselves then feel free to.
|
||||
496
DD/Project-Tartarus/The-EVERYTHING-Short.md
Normal file
496
DD/Project-Tartarus/The-EVERYTHING-Short.md
Normal file
@ -0,0 +1,496 @@
|
||||
The EVERYTHING Short
|
||||
====================
|
||||
|
||||
**Author [u/atobitt](https://www.reddit.com/user/atobitt/)**
|
||||
|
||||
[DD 📊](https://www.reddit.com/r/GME/search?q=flair_name%3A%22DD%20%F0%9F%93%8A%22&restrict_sr=1)
|
||||
|
||||
4/4/2021 EDIT: Just got done watching [this review](https://www.youtube.com/watch?v=6pnK7W4b0Ro) (2:09:37) from George Gammon and Meet Kevin. As pointed out by George, the link I posted below talking about the submitted repo amount was ONLY showing the NY Fed's total for that day. According to his own research, he suspects that $4 TRILLION is pumped through this market, EACH DAY.
|
||||
|
||||
4/1/2021 EDIT: GREAT NEWS APES! [u/dontfightthevol](https://www.reddit.com/u/dontfightthevol/) has been reviewing my post and helping me address weaknesses! I take this as REALLY good news as we move another step closer to exposing the TRUTH. Furthermore, I am making updates that take speculative connections out of this post.
|
||||
|
||||
The first one being the WSJ article covering BlackRock, where the fed has tapped them to purchase bonds for the government. These bonds consist of mortgage backed securities and corporate bonds- NOT TREASURIES. While this does not destroy the concept within the post, it DOES remove a link between the speculative relationship of BlackRock and Citadel. Citadel is still shorting bonds, other hedge funds are shorting bonds, BlackRock just isn't buying treasuries from the government. There are plenty of other financial institutions lending out their treasury bonds.
|
||||
|
||||
We are still discussing the post and I will make updates as they are available.
|
||||
|
||||
STAY TUNED!
|
||||
|
||||
________________________________________________________________________________________________________
|
||||
|
||||
*TL;DR- Citadel and friends have shorted the treasury bond market to oblivion using the repo market. Citadel owns a company called Palafox Trading and uses them to EXCLUSIVELY short & trade treasury securities. Palafox manages one fund for Citadel - the Citadel Global Fixed Income Master Fund LTD. Total assets over $123 BILLION and 80% are owned by offshore investors in the Cayman Islands. Their reverse repo agreements are ENTIRELY rehypothecated and they CANNOT pay off their own repo agreements until someone pays them, first. The ENTIRE global financial economy is modeled after a fractional reserve system that is beginning to experience THE MOTHER OF ALL MARGIN CALLS.*
|
||||
|
||||
*THIS is why the DTC and FICC are requiring an increase in SLR deposits. The madness has officially come full circle.*
|
||||
|
||||
____________________________________________________________________________________________________________
|
||||
|
||||
My fellow apes,
|
||||
|
||||
After writing [Citadel Has No Clothes](https://www.reddit.com/r/GME/comments/m4c0p4/citadel_has_no_clothes/?utm_source=share&utm_medium=web2x&context=3), I couldn't shake one MAJOR issue: *why do they have a balance sheet full of financial derivatives instead of physical shares? Even Melvin keeps their derivative exposure to roughly 20%...(*[*whalewisdom.com*](https://whalewisdom.com/)*, Melvin Capital 13F - 2020)*
|
||||
|
||||
The concept of a hedging instrument is to protect against price fluctuations. Hopefully you get it right and make a good prediction, but to have a portfolio with literally 80% derivatives.... absolute INSANITY.. it's is the complete OPPOSITE of what should happen.. so WHAT is going on?
|
||||
|
||||
Let's break this into 4 parts:
|
||||
|
||||
1. *Repurchase & Reverse Repurchase agreements*
|
||||
|
||||
2. *Treasury Bonds*
|
||||
|
||||
3. *Palafox Trading*
|
||||
|
||||
4. *Short-seller Endgame*
|
||||
|
||||
____________________________________________________________________________________________________________
|
||||
|
||||
Ok, 4 easy steps... as simple as possible.
|
||||
|
||||
*Step 1: Repurchase & Reverse Repurchase agreements.*
|
||||
|
||||
*WTF are they?*
|
||||
|
||||
A Repurchase Agreement is much like a loan. If you have a big juicy banana worth $1,000,000 and need some quick cash, a repo agreement might be right for you. Just take that banana to a pawn shop and pawn it for a few days, borrow some cash, and buy your banana back later (plus a few tendies in interest). This creates a liability for you because you have to buy it back, unless you want to default and lose your big, beautiful banana. Regardless, you either buy it back or lose it. A reverse repo is how the *pawn shop* would account for this transaction.
|
||||
|
||||
*Why do they matter?*
|
||||
|
||||
Repos and reverse repos are the *LIFEBLOOD* of global financial liquidity. They allow for SUPER FAST conversions from securities to cash. The repo agreement I just described is happening daily with hedge funds and commercial banks. *EDIT: Inserting the quote from George Gammon: according to his calculations, the estimated total amount of repos are $4 TRILLION, DAILY.* The NY Fed, alone, submitted [$40.354 BILLION](https://apps.newyorkfed.org/markets/autorates/tomo-results-display?SHOWMORE=TRUE&startDate=01/01/2000&enddate=01/01/2000) for repo agreements on (3/29). This amount represents the ONE DAY REPO due on 3/30. So yeah, SUPER short term loans- usually a few days. It's probably not a surprise that back in 2008 the go-to choice of collateral for repo agreements was mortgage backed securities..
|
||||
|
||||
[Lehman Brothers](https://www.cpajournal.com/2016/08/01/lehman-brothers-mf-globals-misuse-repurchase-agreements-reformed-accounting-standards/) went bankrupt because they fraudulently classified repo agreements as sales. You can do your own research on this, but I'll give you the quick n' dirty:
|
||||
|
||||
Lehman would go to a bank and ask for cash. The bank would ask for collateral in return and Lehman would offer mortgage backed securities (MBS). *It's great having so many mortgages on your balance sheet, but WTF good does it do if you have to wait 30 YEARS for the cash*.... So Lehman gave their collateral to the bank and recorded these loans as *sales* instead of payables, with no intention of buying them back. This *EXTREMELY* overstated their revenue. When the market started realizing how sh*tty these "AAA" securities actually were (thanks to Michael BRRRRRRRRy & friends), they were no longer accepted as collateral for repo loans. We all know what happened next.
|
||||
|
||||
The interest rate in 2008 on repos started climbing as the cost of borrowing money went through the roof. This happens because the collateral is no longer attractive compared to cash. My favorite bedtime story is how the Fed stepped in and bought all of the mean, toxic assets to save the US economy.. They literally paid Fannie & Freddie over [$190 billion in bailouts..](https://projects.propublica.org/bailout/initiatives/1-housing-and-economic-recovery-act-of-2008)
|
||||
|
||||
[](https://preview.redd.it/ry0gqkm7g9q61.png?width=1596&format=png&auto=webp&s=48892cf57a2765e0bdd62575a8ccc8c9e3f65a1a)
|
||||
|
||||
A few years later, [MF Global](https://fas.org/sgp/crs/misc/R42091.pdf) would suffer the same fate when their European repo exposure triggered a massive margin call. Their foreign exposure to repo agreements was nearly 4.5x their total equity.. Both Lehman and MF Global found themselves in a major liquidity conundrum and were forced into bankruptcy. Not to mention the other losses that were incurred by other financial institutions... check this list for [bailout totals](https://projects.propublica.org/bailout/programs).
|
||||
|
||||
But.... did you know this happened AGAIN in 2019?
|
||||
|
||||
[](https://preview.redd.it/9htr7vn8g9q61.jpg?width=912&format=pjpg&auto=webp&s=25995c33d0056f6108471baa373d1a371b5d0cd5)
|
||||
|
||||
Instead of the gradual increase in rates, the damn thing spiked to 10% OVERNIGHT. This little blip almost ruined the whole show. It's a HUGE red flag because it shows how the system MUST remain in tight control: one slip and it's game over.
|
||||
|
||||
The reason for the spike was once again due to a lack of liquidity. The [federal reserve](https://www.federalreserve.gov/econres/notes/feds-notes/what-happened-in-money-markets-in-september-2019-20200227.htm#:~:text=In%20the%20repo%20market%2C%20there,supply%20mismatch%20in%20the%20market) stated there were two main catalysts (click the link): both of which removed the necessary funds that would have fueled the repo market the following day. Basically, their checking account was empty and their utility bill bounced.
|
||||
|
||||
It became apparent that ANOTHER infusion of cash was necessary to prevent the whole damn system from collapsing. *The reason being: institutions did NOT have enough excess liquidity on hand*. Financial institutions needed a fast replacement for the MBS, and J-POW had just the right thing.. $FED go BRRRRRRRRRRRRRRRRR
|
||||
|
||||
[](https://preview.redd.it/7mmmhqf9g9q61.png?width=1200&format=png&auto=webp&s=790466a2979a194facb57919d762cacca815a384)
|
||||
|
||||
"but don't say it's QE.."
|
||||
|
||||
____________________________________________________________________________________________________________
|
||||
|
||||
*Step 2: Treasury Bonds*
|
||||
|
||||
Ever heard of the bond market? Well it's the redheaded step-brother of the STONK market.
|
||||
|
||||
The US government sells you a treasury bond for $1,000 and promises to pay you interest depending on how long you hold it. Might be 1%, might be 3%; might be 3 months, might be 10 years. Regardless, the point is that purchasing the US Treasury bond, in conjunction with mortgage backed securities, allowed the fed to keep pumping unlimited liquid tendies into the repo market. Surely, liquidity won't be an issue anymore, right?
|
||||
|
||||
Now... take the repo scenario from the Lehman Brothers story, but instead of using ONLY mortgage backed securities, add in the US Treasury bond: primarily the 10-year. Note that MBS are still prevalent at 19.1% of all repo transactions, but the US Treasury bond now represents a whopping 67%.
|
||||
|
||||
[](https://preview.redd.it/t5jkjj5bg9q61.png?width=808&format=png&auto=webp&s=8add42402770ffcb76f2cfcb56e4f28196a42e96)
|
||||
|
||||
For now, just know that the US Treasury has replaced the MBS as the dominant source of liquidity in the repo market.
|
||||
|
||||
____________________________________________________________________________________________________________
|
||||
|
||||
*Step 3: Palafox Trading*
|
||||
|
||||
Ever heard of Palafox Trading? Me either. It's pretty much meant to be that way.
|
||||
|
||||
Palafox Trading is a market maker for repurchase agreements. Initially, they appear to be an innocent trading company, but their financial statements revealed a little secret:
|
||||
|
||||
[](https://preview.redd.it/8w7uhymcg9q61.png?width=723&format=png&auto=webp&s=d2350bca6b44c8d470904525dc7dfca914cc7f7a)
|
||||
|
||||
Are you KIDDING ME?... I should have known...
|
||||
|
||||
OF COURSE Citadel has their own private repo market..
|
||||
|
||||
Who else is in this cesspool?!
|
||||
|
||||
[](https://preview.redd.it/ah5775qdg9q61.png?width=360&format=png&auto=webp&s=ad4ab23bdee3739d06f4443e97da4c6172199590)
|
||||
|
||||
[](https://preview.redd.it/hhkco0ueg9q61.png?width=900&format=png&auto=webp&s=7bdb80678d270dd17990312d5024542e61a6db4a)
|
||||
|
||||
I made this using the financial statement listed above, showing all beneficiaries of the GFIL
|
||||
|
||||
Everything rolls into the [Citadel Global Fixed Income Master Fund](https://aum13f.com/firm/citadel-advisors-llc?view_all=fund)... This controls $123,218,147,399 (THAT'S BILLION) in assets under management... I know offshore accounts are technically legal for hedge funds.... but when you look at the itemized holdings of these funds on Citadel's most recent [form ADV](https://reports.adviserinfo.sec.gov/reports/ADV/148826/PDF/148826.pdf), it gives me chills..
|
||||
|
||||
[Form ADV](https://reports.adviserinfo.sec.gov/reports/ADV/148826/PDF/148826.pdf) page 105-106....
|
||||
|
||||
[](https://preview.redd.it/ho4j0oghg9q61.png?width=664&format=png&auto=webp&s=147c10a38cfc2857b4b2691fe70f088a88e83091)
|
||||
|
||||
Ok... ok.... let me get this straight....
|
||||
|
||||
1. The repo market provides IMMEDIATE liquidity to hedge funds and other financial institutions
|
||||
|
||||
2. After the MBS collapse in 2008, the US Treasury replaced it as the liquid asset of choice
|
||||
|
||||
3. Citadel owns 100% of Palafox Trading which is a market maker for repo agreements
|
||||
|
||||
4. This market maker provides liquidity to the Global Fixed Income Master Fund LTD (GFIL) through Citadel Advisors
|
||||
|
||||
5. 80% of its $123,218,147,399 in assets under management belong to entities in the Cayman Islands
|
||||
|
||||
Ok.....I tore the [bermuda, paradise, and panama papers](https://offshoreleaks.icij.org/search?utf8=%E2%9C%93&q=citadel&e=&commit=Search) apart and found that all of these funds boil down to just a few managers, but can't pin anything on them for money laundering... However, if there EVER were a case for it, I'd be extremely suspicious of this one...
|
||||
|
||||
The level of shade on all this is INCREDIBLE... There should be NO ROOM for a investment pool as big as Citadel to hide this sh*t.... absolutely ridiculous..
|
||||
|
||||
The fact that there is so much foreign influence over our bond & repo market, which controls the liquidity of our country, is VERY concerning..
|
||||
|
||||
____________________________________________________________________________________________________________
|
||||
|
||||
*Step 4: Short-seller Endgame*
|
||||
|
||||
Alright, I know this is a lot to take in..
|
||||
|
||||
I've been writing this post for a week, so reading it all at one time is probably going to make your head explode.. But now we can finally start putting all of this together.
|
||||
|
||||
Ok, remember how I explained that the repo rate started to rise in '08 because the collateral was no longer attractive compared to cash? That means there wasn't enough liquidity in the system. Well this time the OPPOSITE effect is happening. Ever since March 2020, the short-term lending rate (repo rate) has nearly dropped to *0.0%....*
|
||||
|
||||
[](https://preview.redd.it/ui9welgkg9q61.png?width=330&format=png&auto=webp&s=fbd5b9501f7bbc386fa62e152ca2b090173692a2)
|
||||
|
||||
https://www.newyorkfed.org/markets/treasury-repo-reference-rates
|
||||
|
||||
So the fed is printing free money, the repo market is lending free money, and there's basically NO difference between the collateral that's being lent and the cash that's being received.. With all this free money going around, it's no wonder why the price of the 10 year treasury has been declining.
|
||||
|
||||
In fact, hedge funds are SO confident that the 10 year treasury will continue to decline, that they've SHORTED THE 10-YEAR BOND MARKET. I'm not talking about speculative shorting, I mean shorting it to oblivion like they've shorted stocks.
|
||||
|
||||
Don't believe me?
|
||||
|
||||
Hedge funds like Citadel Advisors must first locate the treasury bond in order to swap them for cash in the repo market. It's extremely difficult to do this with the fed because they're tied up in government BS, so they locate a lender in the market. These consist of other commercial banks and hedge funds.
|
||||
|
||||
NOTE: I MADE A COMMENT ABOUT BLACKROCK SUPPLYING TREASURY BONDS AND THIS IS NOT TRUE. UPON FURTHER REVIEW ( CREDIT [u/dontfightthevol](https://www.reddit.com/u/dontfightthevol/) ) THESE BONDS CONSIST OF MBS AND CORPORATE BONDS. WHILE THE US TREASURY DEPARTMENT IS INVOLVED, THEY ARE NOT SUPPLYING TREASURY BONDS.
|
||||
|
||||
So financial institutions keep treasuries on reserve for hedgies like Citadel to short. Citadel comes along and asks for the bond, they throw it into Palafox Trading and collect their cash. So what happens when they need to pay for their repo agreement? Surely to GOD there are enough bonds floating around, right? Not unless hedge funds like Citadel have shorted more bonds than there are available.
|
||||
|
||||
Here's the evidence.
|
||||
|
||||
There have been 3 instances over the past year where the repo rate dipped below the "failure" rate of -3.0%. On March 4th 2021, the repo rate hit [-4.25%](https://www.reuters.com/article/usa-bonds-repo/explainer-u-s-treasury-sell-off-spills-over-to-repo-market-idUSL2N2L32FR) which means that investors were willing to PAY someone 4.25% interest to lend THEIR OWN MONEY in exchange for a 10 year treasury bond.
|
||||
|
||||
This is a major signal of a squeeze in the treasury market. It's MAJOR desperation to find bonds. With the federal reserve purchasing them monthly from the open market, it leaves room for a shortage when the repo call hits. If commercial banks and hedge funds haven't purchased more treasuries since first lending them out, short sellers simply cannot cover unless they go into the market and PAY the bond holder for their bond. It's literally the same story as all of the heavily shorted stocks.
|
||||
|
||||
Still not convinced?
|
||||
|
||||
At the end of 2020, Palafox Trading listed $31,257,102,000 (BILLION) in GROSS repo agreements. $30,576,918,000 (BILLION) were directly related to repurchasing treasury bonds....
|
||||
|
||||
[](https://preview.redd.it/m3lg8nzog9q61.png?width=726&format=png&auto=webp&s=747e1f671323227be9c0220aec18f8ec245d3cf1)
|
||||
|
||||
https://sec.report/CIK/0001284170
|
||||
|
||||
But what about their Reverse Repurchase agreements? Don't they have assets to BUY treasury bonds?SURE.. Take a look..
|
||||
|
||||
[](https://preview.redd.it/wt8fbrlrg9q61.png?width=371&format=png&auto=webp&s=72f939a98e0dc34a08b8a58e89ef68045a8e78a7)
|
||||
|
||||
https://sec.report/CIK/0001284170
|
||||
|
||||
SeE tHeRe? I tOlD yOu ThEy HaD iT cOvErEd..
|
||||
|
||||
Yeaaaah... now read the fine print.
|
||||
|
||||
[](https://preview.redd.it/5enfigytg9q61.png?width=354&format=png&auto=webp&s=ab613f3bf46064c674bce68766a90e2b2613a2ec)
|
||||
|
||||
I know the totals are slightly different than the balance above, but they're both from 2020. It's just how they are presented. Check for yourself. (https://sec.report/CIK/0001284170)
|
||||
|
||||
So no, they don't have it covered. Why? Because our POS financial system allows for rehypothecation, that's why. It's a big fancy word for using amounts owed to you as collateral for another transaction. In the event that the party defaults, SO DO YOU.
|
||||
|
||||
This means that the securities which Palafox is waiting to receive, have ALREADY been pledged to pay off the bonds they currently OWE to someone else.
|
||||
|
||||
Does this sound familiar? Promising to repay something with something you don't already have? Basically you need to wait on Ted, to repay Steve, to repay Jan, to repay Mark, to repay you, so you can repay Fred, so Fred can.... Yeah, REAAAAL secure..
|
||||
|
||||
OH, and by the way, the problem is getting WORSE.
|
||||
|
||||
Here's Palafox's financial statements in 2018:
|
||||
|
||||
[](https://preview.redd.it/lrtryfivg9q61.png?width=720&format=png&auto=webp&s=d850854f0fbcf0a5d701374ed5634d6eaf036919)
|
||||
|
||||
https://sec.report/CIK/0001284170
|
||||
|
||||
And 2019:
|
||||
|
||||
[](https://preview.redd.it/zjxda0swg9q61.png?width=721&format=png&auto=webp&s=4c124bfd8b4f4a9162b2a2b65ade4b690b4dfadd)
|
||||
|
||||
https://sec.report/CIK/0001284170
|
||||
|
||||
The amount in 2020 is STILL +100% greater than 2019, AFTER netting (which is even more bullsh*t).
|
||||
|
||||
[](https://preview.redd.it/xjss7dzxg9q61.png?width=714&format=png&auto=webp&s=9ff71bf6631f9e665378a0f4a623a95e3aecb264)
|
||||
|
||||
https://sec.report/CIK/0001284170
|
||||
|
||||
____________________________________________________________________________________________________________
|
||||
|
||||
All of this made me wonder what the FICC's balance is for treasury deposits... For those of you that don't know, the FICC is a branch of the DTCC that deals with government securities.
|
||||
|
||||
Just like the updated DTC rule for supplemental liquidity deposits being calculated throughout the day, the FICC also calculates this amount as it relates to treasury securities multiple times throughout the day.
|
||||
|
||||
Would you be surprised that the FICC has $47,000,000,000 (BILLION) just in DEPOSITS for unsettled treasury bonds? $47,000,000,000!?!?!?
|
||||
|
||||
CAN YOU IMAGINE HOW ASTRONOMICAL THE ACTUAL MARGIN MUST BE?!
|
||||
|
||||
[](https://preview.redd.it/zrkpzdb1h9q61.png?width=710&format=png&auto=webp&s=64f6b10aca2566bcf9b5d560967af3715104b839)
|
||||
|
||||
____________________________________________________________________________________________________________
|
||||
|
||||
There is TOO much evidence, from TOO many separate events, pointing to the imminent default of something big. That's all this is going to take. When Ted can't repay Steve, it means the panic has already started. Just look at how easy it was for the repo rate to spike overnight in 2019..
|
||||
|
||||
We are already starting to see the consequences of the SLR update with Archegos, Nomura, and Credit Suisse. This is just a taste of what's to come.. and now we know the bond market represents an even BIGGER catalyst in triggering this event.. and it's happening already.
|
||||
|
||||
With that being said, things finally started to make sense... Citadel doesn't NEED shares if their investment strategy to go short on EVERYTHING instead of going long. Why bother owning shares? Financial institutions and other asset managers simply lend them to you when you need to pony up a margin call for stocks and bonds..
|
||||
|
||||
Their HFT systems allow them to manipulate the market in their favor so there's NO way they could fail.... unless.... a bunch of degenerates all decided to ignore taking profits...
|
||||
|
||||
But that would NEVER happen, right?
|
||||
|
||||
...wrong...
|
||||
|
||||
we just like the stonks
|
||||
|
||||
DIAMOND.F*CKING.HANDS
|
||||
|
||||
*This is not financial advice*
|
||||
|
||||
[DD 📊](https://www.reddit.com/r/GME/search?q=flair_name%3A%22DD%20%F0%9F%93%8A%22&restrict_sr=1)
|
||||
|
||||
4/4/2021 EDIT: Just got done watching [this review](https://www.youtube.com/watch?v=6pnK7W4b0Ro) (2:09:37) from George Gammon and Meet Kevin. As pointed out by George, the link I posted below talking about the submitted repo amount was ONLY showing the NY Fed's total for that day. According to his own research, he suspects that $4 TRILLION is pumped through this market, EACH DAY.
|
||||
|
||||
4/1/2021 EDIT: GREAT NEWS APES! [u/dontfightthevol](https://www.reddit.com/u/dontfightthevol/) has been reviewing my post and helping me address weaknesses! I take this as REALLY good news as we move another step closer to exposing the TRUTH. Furthermore, I am making updates that take speculative connections out of this post.
|
||||
|
||||
The first one being the WSJ article covering BlackRock, where the fed has tapped them to purchase bonds for the government. These bonds consist of mortgage backed securities and corporate bonds- NOT TREASURIES. While this does not destroy the concept within the post, it DOES remove a link between the speculative relationship of BlackRock and Citadel. Citadel is still shorting bonds, other hedge funds are shorting bonds, BlackRock just isn't buying treasuries from the government. There are plenty of other financial institutions lending out their treasury bonds.
|
||||
|
||||
We are still discussing the post and I will make updates as they are available.
|
||||
|
||||
STAY TUNED!
|
||||
|
||||
________________________________________________________________________________________________________
|
||||
|
||||
*TL;DR- Citadel and friends have shorted the treasury bond market to oblivion using the repo market. Citadel owns a company called Palafox Trading and uses them to EXCLUSIVELY short & trade treasury securities. Palafox manages one fund for Citadel - the Citadel Global Fixed Income Master Fund LTD. Total assets over $123 BILLION and 80% are owned by offshore investors in the Cayman Islands. Their reverse repo agreements are ENTIRELY rehypothecated and they CANNOT pay off their own repo agreements until someone pays them, first. The ENTIRE global financial economy is modeled after a fractional reserve system that is beginning to experience THE MOTHER OF ALL MARGIN CALLS.*
|
||||
|
||||
*THIS is why the DTC and FICC are requiring an increase in SLR deposits. The madness has officially come full circle.*
|
||||
|
||||
____________________________________________________________________________________________________________
|
||||
|
||||
My fellow apes,
|
||||
|
||||
After writing [Citadel Has No Clothes](https://www.reddit.com/r/GME/comments/m4c0p4/citadel_has_no_clothes/?utm_source=share&utm_medium=web2x&context=3), I couldn't shake one MAJOR issue: *why do they have a balance sheet full of financial derivatives instead of physical shares? Even Melvin keeps their derivative exposure to roughly 20%...(*[*whalewisdom.com*](https://whalewisdom.com/)*, Melvin Capital 13F - 2020)*
|
||||
|
||||
The concept of a hedging instrument is to protect against price fluctuations. Hopefully you get it right and make a good prediction, but to have a portfolio with literally 80% derivatives.... absolute INSANITY.. it's is the complete OPPOSITE of what should happen.. so WHAT is going on?
|
||||
|
||||
Let's break this into 4 parts:
|
||||
|
||||
1. *Repurchase & Reverse Repurchase agreements*
|
||||
|
||||
2. *Treasury Bonds*
|
||||
|
||||
3. *Palafox Trading*
|
||||
|
||||
4. *Short-seller Endgame*
|
||||
|
||||
____________________________________________________________________________________________________________
|
||||
|
||||
Ok, 4 easy steps... as simple as possible.
|
||||
|
||||
*Step 1: Repurchase & Reverse Repurchase agreements.*
|
||||
|
||||
*WTF are they?*
|
||||
|
||||
A Repurchase Agreement is much like a loan. If you have a big juicy banana worth $1,000,000 and need some quick cash, a repo agreement might be right for you. Just take that banana to a pawn shop and pawn it for a few days, borrow some cash, and buy your banana back later (plus a few tendies in interest). This creates a liability for you because you have to buy it back, unless you want to default and lose your big, beautiful banana. Regardless, you either buy it back or lose it. A reverse repo is how the *pawn shop* would account for this transaction.
|
||||
|
||||
*Why do they matter?*
|
||||
|
||||
Repos and reverse repos are the *LIFEBLOOD* of global financial liquidity. They allow for SUPER FAST conversions from securities to cash. The repo agreement I just described is happening daily with hedge funds and commercial banks. *EDIT: Inserting the quote from George Gammon: according to his calculations, the estimated total amount of repos are $4 TRILLION, DAILY.* The NY Fed, alone, submitted [$40.354 BILLION](https://apps.newyorkfed.org/markets/autorates/tomo-results-display?SHOWMORE=TRUE&startDate=01/01/2000&enddate=01/01/2000) for repo agreements on (3/29). This amount represents the ONE DAY REPO due on 3/30. So yeah, SUPER short term loans- usually a few days. It's probably not a surprise that back in 2008 the go-to choice of collateral for repo agreements was mortgage backed securities..
|
||||
|
||||
[Lehman Brothers](https://www.cpajournal.com/2016/08/01/lehman-brothers-mf-globals-misuse-repurchase-agreements-reformed-accounting-standards/) went bankrupt because they fraudulently classified repo agreements as sales. You can do your own research on this, but I'll give you the quick n' dirty:
|
||||
|
||||
Lehman would go to a bank and ask for cash. The bank would ask for collateral in return and Lehman would offer mortgage backed securities (MBS). *It's great having so many mortgages on your balance sheet, but WTF good does it do if you have to wait 30 YEARS for the cash*.... So Lehman gave their collateral to the bank and recorded these loans as *sales* instead of payables, with no intention of buying them back. This *EXTREMELY* overstated their revenue. When the market started realizing how sh*tty these "AAA" securities actually were (thanks to Michael BRRRRRRRRy & friends), they were no longer accepted as collateral for repo loans. We all know what happened next.
|
||||
|
||||
The interest rate in 2008 on repos started climbing as the cost of borrowing money went through the roof. This happens because the collateral is no longer attractive compared to cash. My favorite bedtime story is how the Fed stepped in and bought all of the mean, toxic assets to save the US economy.. They literally paid Fannie & Freddie over [$190 billion in bailouts..](https://projects.propublica.org/bailout/initiatives/1-housing-and-economic-recovery-act-of-2008)
|
||||
|
||||
[](https://preview.redd.it/ry0gqkm7g9q61.png?width=1596&format=png&auto=webp&s=48892cf57a2765e0bdd62575a8ccc8c9e3f65a1a)
|
||||
|
||||
A few years later, [MF Global](https://fas.org/sgp/crs/misc/R42091.pdf) would suffer the same fate when their European repo exposure triggered a massive margin call. Their foreign exposure to repo agreements was nearly 4.5x their total equity.. Both Lehman and MF Global found themselves in a major liquidity conundrum and were forced into bankruptcy. Not to mention the other losses that were incurred by other financial institutions... check this list for [bailout totals](https://projects.propublica.org/bailout/programs).
|
||||
|
||||
But.... did you know this happened AGAIN in 2019?
|
||||
|
||||
[](https://preview.redd.it/9htr7vn8g9q61.jpg?width=912&format=pjpg&auto=webp&s=25995c33d0056f6108471baa373d1a371b5d0cd5)
|
||||
|
||||
Instead of the gradual increase in rates, the damn thing spiked to 10% OVERNIGHT. This little blip almost ruined the whole show. It's a HUGE red flag because it shows how the system MUST remain in tight control: one slip and it's game over.
|
||||
|
||||
The reason for the spike was once again due to a lack of liquidity. The [federal reserve](https://www.federalreserve.gov/econres/notes/feds-notes/what-happened-in-money-markets-in-september-2019-20200227.htm#:~:text=In%20the%20repo%20market%2C%20there,supply%20mismatch%20in%20the%20market) stated there were two main catalysts (click the link): both of which removed the necessary funds that would have fueled the repo market the following day. Basically, their checking account was empty and their utility bill bounced.
|
||||
|
||||
It became apparent that ANOTHER infusion of cash was necessary to prevent the whole damn system from collapsing. *The reason being: institutions did NOT have enough excess liquidity on hand*. Financial institutions needed a fast replacement for the MBS, and J-POW had just the right thing.. $FED go BRRRRRRRRRRRRRRRRR
|
||||
|
||||
[](https://preview.redd.it/7mmmhqf9g9q61.png?width=1200&format=png&auto=webp&s=790466a2979a194facb57919d762cacca815a384)
|
||||
|
||||
"but don't say it's QE.."
|
||||
|
||||
____________________________________________________________________________________________________________
|
||||
|
||||
*Step 2: Treasury Bonds*
|
||||
|
||||
Ever heard of the bond market? Well it's the redheaded step-brother of the STONK market.
|
||||
|
||||
The US government sells you a treasury bond for $1,000 and promises to pay you interest depending on how long you hold it. Might be 1%, might be 3%; might be 3 months, might be 10 years. Regardless, the point is that purchasing the US Treasury bond, in conjunction with mortgage backed securities, allowed the fed to keep pumping unlimited liquid tendies into the repo market. Surely, liquidity won't be an issue anymore, right?
|
||||
|
||||
Now... take the repo scenario from the Lehman Brothers story, but instead of using ONLY mortgage backed securities, add in the US Treasury bond: primarily the 10-year. Note that MBS are still prevalent at 19.1% of all repo transactions, but the US Treasury bond now represents a whopping 67%.
|
||||
|
||||
[](https://preview.redd.it/t5jkjj5bg9q61.png?width=808&format=png&auto=webp&s=8add42402770ffcb76f2cfcb56e4f28196a42e96)
|
||||
|
||||
For now, just know that the US Treasury has replaced the MBS as the dominant source of liquidity in the repo market.
|
||||
|
||||
____________________________________________________________________________________________________________
|
||||
|
||||
*Step 3: Palafox Trading*
|
||||
|
||||
Ever heard of Palafox Trading? Me either. It's pretty much meant to be that way.
|
||||
|
||||
Palafox Trading is a market maker for repurchase agreements. Initially, they appear to be an innocent trading company, but their financial statements revealed a little secret:
|
||||
|
||||
[](https://preview.redd.it/8w7uhymcg9q61.png?width=723&format=png&auto=webp&s=d2350bca6b44c8d470904525dc7dfca914cc7f7a)
|
||||
|
||||
Are you KIDDING ME?... I should have known...
|
||||
|
||||
OF COURSE Citadel has their own private repo market..
|
||||
|
||||
Who else is in this cesspool?!
|
||||
|
||||
[](https://preview.redd.it/ah5775qdg9q61.png?width=360&format=png&auto=webp&s=ad4ab23bdee3739d06f4443e97da4c6172199590)
|
||||
|
||||
[](https://preview.redd.it/hhkco0ueg9q61.png?width=900&format=png&auto=webp&s=7bdb80678d270dd17990312d5024542e61a6db4a)
|
||||
|
||||
I made this using the financial statement listed above, showing all beneficiaries of the GFIL
|
||||
|
||||
Everything rolls into the [Citadel Global Fixed Income Master Fund](https://aum13f.com/firm/citadel-advisors-llc?view_all=fund)... This controls $123,218,147,399 (THAT'S BILLION) in assets under management... I know offshore accounts are technically legal for hedge funds.... but when you look at the itemized holdings of these funds on Citadel's most recent [form ADV](https://reports.adviserinfo.sec.gov/reports/ADV/148826/PDF/148826.pdf), it gives me chills..
|
||||
|
||||
[Form ADV](https://reports.adviserinfo.sec.gov/reports/ADV/148826/PDF/148826.pdf) page 105-106....
|
||||
|
||||
[](https://preview.redd.it/ho4j0oghg9q61.png?width=664&format=png&auto=webp&s=147c10a38cfc2857b4b2691fe70f088a88e83091)
|
||||
|
||||
Ok... ok.... let me get this straight....
|
||||
|
||||
1. The repo market provides IMMEDIATE liquidity to hedge funds and other financial institutions
|
||||
|
||||
2. After the MBS collapse in 2008, the US Treasury replaced it as the liquid asset of choice
|
||||
|
||||
3. Citadel owns 100% of Palafox Trading which is a market maker for repo agreements
|
||||
|
||||
4. This market maker provides liquidity to the Global Fixed Income Master Fund LTD (GFIL) through Citadel Advisors
|
||||
|
||||
5. 80% of its $123,218,147,399 in assets under management belong to entities in the Cayman Islands
|
||||
|
||||
Ok.....I tore the [bermuda, paradise, and panama papers](https://offshoreleaks.icij.org/search?utf8=%E2%9C%93&q=citadel&e=&commit=Search) apart and found that all of these funds boil down to just a few managers, but can't pin anything on them for money laundering... However, if there EVER were a case for it, I'd be extremely suspicious of this one...
|
||||
|
||||
The level of shade on all this is INCREDIBLE... There should be NO ROOM for a investment pool as big as Citadel to hide this sh*t.... absolutely ridiculous..
|
||||
|
||||
The fact that there is so much foreign influence over our bond & repo market, which controls the liquidity of our country, is VERY concerning..
|
||||
|
||||
____________________________________________________________________________________________________________
|
||||
|
||||
*Step 4: Short-seller Endgame*
|
||||
|
||||
Alright, I know this is a lot to take in..
|
||||
|
||||
I've been writing this post for a week, so reading it all at one time is probably going to make your head explode.. But now we can finally start putting all of this together.
|
||||
|
||||
Ok, remember how I explained that the repo rate started to rise in '08 because the collateral was no longer attractive compared to cash? That means there wasn't enough liquidity in the system. Well this time the OPPOSITE effect is happening. Ever since March 2020, the short-term lending rate (repo rate) has nearly dropped to *0.0%....*
|
||||
|
||||
[](https://preview.redd.it/ui9welgkg9q61.png?width=330&format=png&auto=webp&s=fbd5b9501f7bbc386fa62e152ca2b090173692a2)
|
||||
|
||||
https://www.newyorkfed.org/markets/treasury-repo-reference-rates
|
||||
|
||||
So the fed is printing free money, the repo market is lending free money, and there's basically NO difference between the collateral that's being lent and the cash that's being received.. With all this free money going around, it's no wonder why the price of the 10 year treasury has been declining.
|
||||
|
||||
In fact, hedge funds are SO confident that the 10 year treasury will continue to decline, that they've SHORTED THE 10-YEAR BOND MARKET. I'm not talking about speculative shorting, I mean shorting it to oblivion like they've shorted stocks.
|
||||
|
||||
Don't believe me?
|
||||
|
||||
Hedge funds like Citadel Advisors must first locate the treasury bond in order to swap them for cash in the repo market. It's extremely difficult to do this with the fed because they're tied up in government BS, so they locate a lender in the market. These consist of other commercial banks and hedge funds.
|
||||
|
||||
NOTE: I MADE A COMMENT ABOUT BLACKROCK SUPPLYING TREASURY BONDS AND THIS IS NOT TRUE. UPON FURTHER REVIEW ( CREDIT [u/dontfightthevol](https://www.reddit.com/u/dontfightthevol/) ) THESE BONDS CONSIST OF MBS AND CORPORATE BONDS. WHILE THE US TREASURY DEPARTMENT IS INVOLVED, THEY ARE NOT SUPPLYING TREASURY BONDS.
|
||||
|
||||
So financial institutions keep treasuries on reserve for hedgies like Citadel to short. Citadel comes along and asks for the bond, they throw it into Palafox Trading and collect their cash. So what happens when they need to pay for their repo agreement? Surely to GOD there are enough bonds floating around, right? Not unless hedge funds like Citadel have shorted more bonds than there are available.
|
||||
|
||||
Here's the evidence.
|
||||
|
||||
There have been 3 instances over the past year where the repo rate dipped below the "failure" rate of -3.0%. On March 4th 2021, the repo rate hit [-4.25%](https://www.reuters.com/article/usa-bonds-repo/explainer-u-s-treasury-sell-off-spills-over-to-repo-market-idUSL2N2L32FR) which means that investors were willing to PAY someone 4.25% interest to lend THEIR OWN MONEY in exchange for a 10 year treasury bond.
|
||||
|
||||
This is a major signal of a squeeze in the treasury market. It's MAJOR desperation to find bonds. With the federal reserve purchasing them monthly from the open market, it leaves room for a shortage when the repo call hits. If commercial banks and hedge funds haven't purchased more treasuries since first lending them out, short sellers simply cannot cover unless they go into the market and PAY the bond holder for their bond. It's literally the same story as all of the heavily shorted stocks.
|
||||
|
||||
Still not convinced?
|
||||
|
||||
At the end of 2020, Palafox Trading listed $31,257,102,000 (BILLION) in GROSS repo agreements. $30,576,918,000 (BILLION) were directly related to repurchasing treasury bonds....
|
||||
|
||||
[](https://preview.redd.it/m3lg8nzog9q61.png?width=726&format=png&auto=webp&s=747e1f671323227be9c0220aec18f8ec245d3cf1)
|
||||
|
||||
https://sec.report/CIK/0001284170
|
||||
|
||||
But what about their Reverse Repurchase agreements? Don't they have assets to BUY treasury bonds?SURE.. Take a look..
|
||||
|
||||
[](https://preview.redd.it/wt8fbrlrg9q61.png?width=371&format=png&auto=webp&s=72f939a98e0dc34a08b8a58e89ef68045a8e78a7)
|
||||
|
||||
https://sec.report/CIK/0001284170
|
||||
|
||||
SeE tHeRe? I tOlD yOu ThEy HaD iT cOvErEd..
|
||||
|
||||
Yeaaaah... now read the fine print.
|
||||
|
||||
[](https://preview.redd.it/5enfigytg9q61.png?width=354&format=png&auto=webp&s=ab613f3bf46064c674bce68766a90e2b2613a2ec)
|
||||
|
||||
I know the totals are slightly different than the balance above, but they're both from 2020. It's just how they are presented. Check for yourself. (https://sec.report/CIK/0001284170)
|
||||
|
||||
So no, they don't have it covered. Why? Because our POS financial system allows for rehypothecation, that's why. It's a big fancy word for using amounts owed to you as collateral for another transaction. In the event that the party defaults, SO DO YOU.
|
||||
|
||||
This means that the securities which Palafox is waiting to receive, have ALREADY been pledged to pay off the bonds they currently OWE to someone else.
|
||||
|
||||
Does this sound familiar? Promising to repay something with something you don't already have? Basically you need to wait on Ted, to repay Steve, to repay Jan, to repay Mark, to repay you, so you can repay Fred, so Fred can.... Yeah, REAAAAL secure..
|
||||
|
||||
OH, and by the way, the problem is getting WORSE.
|
||||
|
||||
Here's Palafox's financial statements in 2018:
|
||||
|
||||
[](https://preview.redd.it/lrtryfivg9q61.png?width=720&format=png&auto=webp&s=d850854f0fbcf0a5d701374ed5634d6eaf036919)
|
||||
|
||||
https://sec.report/CIK/0001284170
|
||||
|
||||
And 2019:
|
||||
|
||||
[](https://preview.redd.it/zjxda0swg9q61.png?width=721&format=png&auto=webp&s=4c124bfd8b4f4a9162b2a2b65ade4b690b4dfadd)
|
||||
|
||||
https://sec.report/CIK/0001284170
|
||||
|
||||
The amount in 2020 is STILL +100% greater than 2019, AFTER netting (which is even more bullsh*t).
|
||||
|
||||
[](https://preview.redd.it/xjss7dzxg9q61.png?width=714&format=png&auto=webp&s=9ff71bf6631f9e665378a0f4a623a95e3aecb264)
|
||||
|
||||
https://sec.report/CIK/0001284170
|
||||
|
||||
____________________________________________________________________________________________________________
|
||||
|
||||
All of this made me wonder what the FICC's balance is for treasury deposits... For those of you that don't know, the FICC is a branch of the DTCC that deals with government securities.
|
||||
|
||||
Just like the updated DTC rule for supplemental liquidity deposits being calculated throughout the day, the FICC also calculates this amount as it relates to treasury securities multiple times throughout the day.
|
||||
|
||||
Would you be surprised that the FICC has $47,000,000,000 (BILLION) just in DEPOSITS for unsettled treasury bonds? $47,000,000,000!?!?!?
|
||||
|
||||
CAN YOU IMAGINE HOW ASTRONOMICAL THE ACTUAL MARGIN MUST BE?!
|
||||
|
||||
[](https://preview.redd.it/zrkpzdb1h9q61.png?width=710&format=png&auto=webp&s=64f6b10aca2566bcf9b5d560967af3715104b839)
|
||||
|
||||
____________________________________________________________________________________________________________
|
||||
|
||||
There is TOO much evidence, from TOO many separate events, pointing to the imminent default of something big. That's all this is going to take. When Ted can't repay Steve, it means the panic has already started. Just look at how easy it was for the repo rate to spike overnight in 2019..
|
||||
|
||||
We are already starting to see the consequences of the SLR update with Archegos, Nomura, and Credit Suisse. This is just a taste of what's to come.. and now we know the bond market represents an even BIGGER catalyst in triggering this event.. and it's happening already.
|
||||
|
||||
With that being said, things finally started to make sense... Citadel doesn't NEED shares if their investment strategy to go short on EVERYTHING instead of going long. Why bother owning shares? Financial institutions and other asset managers simply lend them to you when you need to pony up a margin call for stocks and bonds..
|
||||
|
||||
Their HFT systems allow them to manipulate the market in their favor so there's NO way they could fail.... unless.... a bunch of degenerates all decided to ignore taking profits...
|
||||
|
||||
But that would NEVER happen, right?
|
||||
|
||||
...wrong...
|
||||
|
||||
we just like the stonks
|
||||
|
||||
DIAMOND.F*CKING.HANDS
|
||||
|
||||
*This is not financial advice*
|
||||
316
DD/Project-Tartarus/Walkin-Like-a-Duck-Talkin-Like-a-Duck.md
Normal file
316
DD/Project-Tartarus/Walkin-Like-a-Duck-Talkin-Like-a-Duck.md
Normal file
@ -0,0 +1,316 @@
|
||||
Walkin' like a duck. Talkin' like a duck
|
||||
========================================
|
||||
|
||||
**Author:[uatobitt](https://www.reddit.com/user/atobitt/)**
|
||||
|
||||
[Serious DD 👨🔬🔬](https://www.reddit.com/r/Superstonk/search?q=flair_name%3A%22Serious%20DD%20%F0%9F%91%A8%E2%80%8D%F0%9F%94%AC%F0%9F%94%AC%22&restrict_sr=1)
|
||||
|
||||
TL;DR - I have prepared a case which strongly indicates that Citadel Securities, along with it's "affiliates" are committing securities fraud. On March 26th 2021, FINRA released a new citation against Citadel Securities for nearly 2 years worth of securities violations. The only reason Citadel HASN'T been busted for fraud is because they hide behind the veil of 'unintentional' behavior. However, this post illustrates how Citadel's actions flag ALL 3 corners of the fraud triangle- *pressure, motivation, and opportunity.* It's time for these people to be held accountable.
|
||||
|
||||
____________________________________________________________________________________________________________
|
||||
|
||||
Trying something new this time.
|
||||
|
||||
I recorded a video walkthrough of this DD with [u/isitabuy](https://www.reddit.com/u/isitabuy/), prior to dropping the DD.
|
||||
|
||||
If you wanna watch that, [click here](https://youtu.be/13G02Gn64u4)
|
||||
|
||||
Prerequisite DD
|
||||
|
||||
[1\. Citadel Has No Clothes](https://www.reddit.com/r/GME/comments/m4c0p4/citadel_has_no_clothes/)
|
||||
|
||||
[2\. BlackRock Bagholders, INC.](https://www.reddit.com/r/GME/comments/m7o7iy/blackrock_bagholders_inc/)
|
||||
|
||||
[3\. The EVERYTHING Short](https://www.reddit.com/r/GME/comments/mgucv2/the_everything_short/)
|
||||
|
||||
____________________________________________________________________________________________________________
|
||||
|
||||
My fellow apes,
|
||||
|
||||
Many of you are wondering how these posts about Citadel relate to GameStop. Perhaps I've lost sight on explaining this connection, so let me clear this up before diving into MORE sh*t on them.
|
||||
|
||||
As [u/dontfightthevol](https://www.reddit.com/u/dontfightthevol/) pointed out: you just never know what a company's short position is because they aren't required to disclose it. And unfortunately, she's right.
|
||||
|
||||
What we can do, however, is expose the sh*t surrounding them. The fraud triangle WORKS because people act maliciously when they have the pressure, incentive, and opportunity to commit it. PERIOD. This means if it walks and talks like a duck, it's most likely a f*cking duck.
|
||||
|
||||
I hope I've done a good job revealing the evidence of their ever-tightening noose. To name a few big ones:
|
||||
|
||||
1. the FINRA violations for naked shorting, failing to post a short sale indicator on transactions, withholding large customer orders to lower the market price, FLASH crashes
|
||||
|
||||
2. the growth of rehypothecated assets for both treasury & equity securities (especially in 2020)
|
||||
|
||||
3. the growth in liabilities as their PROMISES to repay keeps getting bigger and bigger (especially in 2020)
|
||||
|
||||
4. FINRA's concern regarding the lack of preventative measures within their system to detect these issues
|
||||
|
||||
5. the number of times they've been documented for 'accidently' removing logic to detect these issues
|
||||
|
||||
Everything fits within ALL corners of the fraud triangle. Citadel commits violations just to make a few million, knowing their fines are essentially just a small tax. Now that their exposure to shorted stocks and bonds is increasing, the PRESSURE to commit these actions is even higher.
|
||||
|
||||
For far too long, people with money have been draining the wealth out of the global economy. Everything around us becomes more expensive and the power to do anything about it, decreases. We are forced to think about pinching-pennies just to make ends-meet, while there are people benefitting from ALL of this injustice- the ultra-wealthy.
|
||||
|
||||
This aggregation of wealth has been going on behind the scenes for centuries. Slowly and gradually like a frog sitting in a pot of boiling water. Debt has been designed to be carried for life.
|
||||
|
||||
Their confidence and greed reached a level SO HIGH that it should have been impossible for them to fail on their bet against GameStop. The ONLY thing that could blow their victory was if we all started listening to one another.. and most importantly- learning.
|
||||
|
||||
And learn, we did...
|
||||
|
||||
We sat down at the World Series of Poker, called their bluff, and won.
|
||||
|
||||
GameStop is the lynchpin; GameStop opens the flood gates; GameStop is our checkmate.
|
||||
|
||||
GameStop exposes them to a LIMITLESS and IMMEDIATE transfer of wealth back to the 99%. This situation is dangerous because those who put their vote into GameStop are finally able to take back control.
|
||||
|
||||
GameStop is our hedge against the funds ____________________________________________________________________________________________________________
|
||||
|
||||
Hopefully that's been cleared up and we can get back to the point of this post.
|
||||
|
||||
Now.... This sh*t just KEEPS COMING!
|
||||
|
||||
To me, this is further evidence of their desperate actions within a rigged market. After [calling out Citadel](https://www.reddit.com/r/GME/comments/mgucv2/the_everything_short/) for shorting US treasuries, I recently found out they've been slapped with ANOTHER [FINRA violation](https://www.finra.org/sites/default/files/fda_documents/2019061038301%20Citadel%20Securities%20LLC%20CRD%20116797%20AWC%20jlg.pdf) on 3/25/2021 for US treasury securities..
|
||||
|
||||
yeah....seriously..
|
||||
|
||||
BTW, this wasn't even something I was searching for.. I literally walked Cory (the host) through my investigative process and uncovered it in our first [live interview](https://www.youtube.com/watch?v=AaalT8rn9lc) *(this link is for the short version; I uncovered it in the long version which wasn't posted).*
|
||||
|
||||
Anyway, these violations occurred between July 2017 and October 2019 while the Fed's tapering program was kicking off. It's extremely hard to be conclusive about the little details when you can only see a portion of the puzzle, so I usually start these DDs by finding WIDE holes that scream for attention- this violation is one of those holes. Citadel Securities has been [slapped 58 times](https://www.reddit.com/r/GME/comments/m4c0p4/citadel_has_no_clothes/) for regulatory violations and those are JUST within the stock market. To me, the reason why THIS violation is so monumental is because it represents their FIRST treasuries violation ([first page](https://www.finra.org/sites/default/files/fda_documents/2019061038301%20Citadel%20Securities%20LLC%20CRD%20116797%20AWC%20jlg.pdf) under background). FINRA issued them a $275,000 fine along with a censure order, meaning they really disprove of Citadel's actions, here. ____________________________________________________________________________________________________________
|
||||
|
||||
I'm going to show you pieces of the disclosure event and gently massage it into your smooth brains.
|
||||
|
||||
[](https://preview.redd.it/fcbti40lsgr61.png?width=598&format=png&auto=webp&s=4bbdef79a6952eb2922fc3414cdb9547317cd29b)
|
||||
|
||||
[](https://preview.redd.it/49ovd6zlsgr61.png?width=597&format=png&auto=webp&s=123db57e0e0b60b0d5e4b48639691f309b90f775)
|
||||
|
||||
1. Incorrectly reporting internal transfers as treasury transactions
|
||||
|
||||
2. Failing to append the "No Remuneration" indicator to TRACE reports for certain transactions between affiliates
|
||||
|
||||
3. Failing to include the correct contra-party type in its TRACE reports for certain affiliates
|
||||
|
||||
To me, the biggest red flag in this comes from the very last sentence: *"IN ALL CASES, THE INCORRECT TRACE REPORTS INVOLVED INTERNAL POSITION TRANSFERS OR TRANSACTIONS WITH AFFILIATES AND DID NOT INVOLVE TRANSACTIONS WITH CLIENTS"**.* I'll touch back on the rest of the violation, shortly.
|
||||
|
||||
Now, lemme take you to school.
|
||||
|
||||
I'll walk you through these indicators and then discuss how they relate to Citadel's situation.
|
||||
|
||||
____________________________________________________________________________________________________________
|
||||
|
||||
What are related party transactions and why do they matter?
|
||||
|
||||
The codification (official accounting bible from FASB) explains related party disclosures under ASC 850. I'd love to have a subscription to this, but it's about $1,200 a year. So here's a [link](https://dart.deloitte.com/USDART/home/codification/broad-transactions/asc850) from Deloitte that gives a decent overview of ASC 850-10.
|
||||
|
||||
A typical related party transaction occurs just like a normal transaction, but the parties involved have a connection, somehow. They can be:
|
||||
|
||||
1. *A parent entity and its subsidiaries*
|
||||
|
||||
2. *Subsidiaries of a common parent*
|
||||
|
||||
3. *An entity and trusts for the benefit of employees, such as pension and profit-sharing trusts that are managed by or under the trusteeship of the entity's management*
|
||||
|
||||
4. *An entity and its principal owners, management, or members of their immediate families*
|
||||
|
||||
5. *Affiliates.*
|
||||
|
||||
Transactions can be any of the following:
|
||||
|
||||
1. *Sales, purchases, and transfers of real and personal property*
|
||||
|
||||
2. *Services received or furnished, such as accounting, management, engineering, and legal services*
|
||||
|
||||
3. *Use of property and equipment by lease or otherwise*
|
||||
|
||||
4. *Borrowings, lendings, and guarantees*
|
||||
|
||||
5. *Maintenance of compensating bank balances for the benefit of a related party*
|
||||
|
||||
6. *Intra-entity billings based on allocations of common costs*
|
||||
|
||||
7. *Filings of consolidated tax returns.*
|
||||
|
||||
When you have related parties, or affiliated parties, the biggest concern is that a relationship materially affects the way that business is conducted. For example, you should disclose situations where subsidiaries are conducting transactions with the parent entity. Or if the subsidiary is wholly owned, which means you're doing business with yourself, at least in practice. The failure to disclose this information may materially mislead investors.
|
||||
|
||||
For example, party A (affiliate) may be selling products / services to party B (also an affiliate) at a rate that differs significantly from the open market. For example, Party A sells treasuries to Party B at an amount that's much lower ($990) than fair market ($1,000). This would allow Party B to sell those securities back into the market at the normal market rate ($1,000), and record a bigger profit ($10) because their cost is much lower ($990). Party A then offsets the expense ($10) back to yet ANOTHER company, and removes it from their books. Hedge funds and offshore funds are perfect for burying these transactions because they don't report financial statements like public companies.
|
||||
|
||||
Likewise, Party A may need to remove something from their balance sheet (bad loans, etc.) and simply use Party B as a dumpster. This is EXACTLY what [Enron](https://www.journalofaccountancy.com/issues/2002/apr/theriseandfallofenron.html) did with their special purpose entities (REMEMBER THAT TERM), or SPEs. When Enron had to incur huge losses, they simply shifted those losses to shell companies and left the "good" stuff on their books.
|
||||
|
||||
Queue violation # 1
|
||||
|
||||
____________________________________________________________________________________________________________
|
||||
|
||||
[](https://preview.redd.it/y4nqv3nwsgr61.png?width=934&format=png&auto=webp&s=5b82bb5a74d510e5d0489c9cfe32c7e856c55289)
|
||||
|
||||
Ok.... when you send transactions to the TRACE system, they ask you to prove they are legitimate. If they are legitimate, and occur with an affiliate, FINRA needs to know that.. This is to prevent frauds like Enron from happening again.
|
||||
|
||||
For sake of argument, let's just ignore the part where they "unintentionally" removed logic and then "intentionally" reinserted it..... because that would make this DD too damn easy.
|
||||
|
||||
Breaking this down:
|
||||
|
||||
1. Citadel OVER reported 452,451 securities transactions which represents only 14% of total REPORTED transactions to TRACE. This means that Citadel reported 3,231,792 treasury transactions, and 1 transaction doesn't necessarily mean 1 treasury... could be thousands
|
||||
|
||||
2. They were not required to report 14% of those because they SHOULD have been flagged as internal transfers and not treasury transactions
|
||||
|
||||
Now we begin to uncover the corners of the fraud triangle *(pressure, incentive, opportunity)*. Citadel was obviously compliant for 86% of their treasury reports, so WHY would they feel the need to "unintentionally" OVER-report 14%....
|
||||
|
||||
Hey Citadel... why you WALKIN' like a duck?
|
||||
|
||||
____________________________________________________________________________________________________________
|
||||
|
||||
How did FINRA find out these were actually internal transfers? Probably the same way I did- by looking for clues. Check out Citadel Securities "Related Party Disclosures" from 2020 (same as in 2019, I checked).
|
||||
|
||||
[](https://preview.redd.it/mbo5ina2tgr61.png?width=862&format=png&auto=webp&s=a447438353463706035d9c7a377135e502da2e0b)
|
||||
|
||||
CSHC..... Who are you, REALLY???
|
||||
|
||||
Ladies and Gentlemen,
|
||||
|
||||
Presenting [Citadel Securities Institutional, LLC](https://sec.report/Document/0001649718-21-000001/CSIN_StmtFinCndtn2020.pdf)!!!
|
||||
|
||||
[](https://preview.redd.it/g5z47qe3tgr61.png?width=919&format=png&auto=webp&s=848a3a19b8a58431cb062e4693b8e56d868f912f)
|
||||
|
||||
Think it's the same company?
|
||||
|
||||
[Nope..](https://sec.report/Document/0001616344-21-000004/CDRG_StmtFinCndtn2020.pdf)
|
||||
|
||||
[](https://preview.redd.it/4wcm9m94tgr61.png?width=814&format=png&auto=webp&s=b0b3d452794547d5df6382723a8da98dfe571aa3)
|
||||
|
||||
Citadel Securities INSTITUTIONAL is a completely different company in the books. These guys are AFFILIATED to one another, but exist separately as [SPECIAL PURPOSE ENTITIES](https://www.investopedia.com/terms/s/spv.asp), or SPEs..
|
||||
|
||||
____________________________________________________________________________________________________________
|
||||
|
||||
Let's walk through this again..
|
||||
|
||||
Citadel SECURITIES lists [CSHC US LLC ("CSHC") as an affiliate](https://sec.report/Document/0001616344-21-000004/CDRG_StmtFinCndtn2020.pdf) (PG 2), and the sole MEMBER of the company....
|
||||
|
||||
[](https://preview.redd.it/n5ykf829tgr61.png?width=862&format=png&auto=webp&s=3ef1a464413629ee22759e0d1528e1e2a4406550)
|
||||
|
||||
Citadel Securities INSTITUTIONAL ("CSHC") lists [CSHC US LLC ("CSUH") as an affiliate](https://sec.report/Document/0001649718-21-000001/CSIN_StmtFinCndtn2020.pdf) (also PG 2), and ALSO as the sole MEMBER of the company....
|
||||
|
||||
[](https://preview.redd.it/ynqzaew9tgr61.png?width=961&format=png&auto=webp&s=26807d8e726d1c3ccb6fb9af734fe890e5ef000a)
|
||||
|
||||
CSHC US LLC ("CSUH")???? Who the hell is this?
|
||||
|
||||
Had to go back to a financial disclosure in 2016 to dig up this lil' jewel....
|
||||
|
||||
[](https://preview.redd.it/fx0r57obtgr61.png?width=1185&format=png&auto=webp&s=0256f01be3951e02f6decbc40b1200a79e575dbe)
|
||||
|
||||
CLP Holdings Three LLC ("CLP3")........
|
||||
|
||||
WTF....
|
||||
|
||||
On January 1, 2016 "CLP3" merged into ("CSUH")....
|
||||
|
||||
So WHO is [CLP Holdings Three LLC](https://www.sec.gov/rules/sro/box/2015/34-74267.pdf) ?!?!?!?!?
|
||||
|
||||
[](https://preview.redd.it/ggcw60wetgr61.png?width=650&format=png&auto=webp&s=af20238b93bc4cd513c841c6cf939a9df924ff70)
|
||||
|
||||
....found this from 2015 (bottom paragraph, PG 2)...
|
||||
|
||||
1. Citadel Parent Owns 100% of CLP Holdings Three LLC, which became "CSUH" in 2016
|
||||
|
||||
2. CSHC US LLC ("CSUH") is the ONLY member of CSHC US LLC ("CSHC")
|
||||
|
||||
3. CSHC US LLC ("CSHC") is ALSO managed by Citadel Parent.....
|
||||
|
||||
So basically......
|
||||
|
||||
...Citadel, is Citadel, is Citadel, is Citadel....
|
||||
|
||||
No wonder why FINRA was pissed. It *LOOKS LIKE* Citadel took treasuries from Citadel Securities and transferred them to Citadel Securities Institutional, but reported them as sales transactions to TRACE......
|
||||
|
||||
____________________________________________________________________________________________________________
|
||||
|
||||
[Queue violation # 2](https://www.finra.org/sites/default/files/fda_documents/2019061038301%20Citadel%20Securities%20LLC%20CRD%20116797%20AWC%20jlg.pdf)
|
||||
|
||||
[](https://preview.redd.it/zedlmj1ltgr61.png?width=802&format=png&auto=webp&s=28a1318da187c5aea37d339e157acfb75a022cef)
|
||||
|
||||
Again, let's ignore the part where they pretended to "discover" the issue in June 2019 prior to being contacted. Let's also ignore the lack of "necessary" logic to determine which transactions are which.
|
||||
|
||||
They do this in almost every f*cking violation they get...
|
||||
|
||||
Now what is [remuneration](https://www.finra.org/sites/default/files/notice_doc_file_ref/Regulatory-Notice-15-47.pdf)?
|
||||
|
||||
Basically, it's a type of compensation. In the case of Citadel Securities, it's the price adjustment that is passed to Citadel Securities Institutional when a treasury is sold / lent.
|
||||
|
||||
A normal market transaction might sell a treasury security for $1,000. In this case, the $1,000 is entirely represented by the bond's value.
|
||||
|
||||
An affiliated market transaction might sell a treasury security for $990, with $10 in remuneration for a total of ($1,000). In this case, the bond is ONLY worth $990, but the $10 in remuneration makes it APPEAR like a $1,000 bond..
|
||||
|
||||
FINRA asks for companies to disclose this because it can be heavily abused, obviously...
|
||||
|
||||
This is what happened to Citadel Securities. There were 45,638 instances between July 2017 and October 2019 where Citadel Securities did NOT appropriately indicate this....
|
||||
|
||||
If you fail to indicate this, and ALSO report internal transfers as normal transactions, it REALLY starts to look like you're covering your tracks....
|
||||
|
||||
Citadel...... Why you TALKIN' like a duck?
|
||||
|
||||
[Queue Violation #3.](https://www.finra.org/sites/default/files/fda_documents/2019061038301%20Citadel%20Securities%20LLC%20CRD%20116797%20AWC%20jlg.pdf)
|
||||
|
||||
____________________________________________________________________________________________________________
|
||||
|
||||
[](https://preview.redd.it/ur98wqavtgr61.png?width=703&format=png&auto=webp&s=0ea8d3c64afc1f06fa3f700dc04b9132f24ce7ee)
|
||||
|
||||
Call this the smoking gun.....
|
||||
|
||||
Really.... it doesn't get much more obvious than this....
|
||||
|
||||
Citadel Securities gets busted pushing transactions into the TRACE system when they were really just internal transfers between SPEs....
|
||||
|
||||
They're then cited for failing to indicate a No Remuneration transaction with affiliated parties....
|
||||
|
||||
And finally, they "misclassified" the nature of the contra party in 11,989 transactions, saying they were customers instead of their own... you guessed it.... SPEs..
|
||||
|
||||
____________________________________________________________________________________________________________
|
||||
|
||||
Want more? Check out this disclosure from Citadel Securities....
|
||||
|
||||
[](https://preview.redd.it/q7imuxb3ugr61.png?width=636&format=png&auto=webp&s=fe9f5f5163eaf4daffc32eefbf41fc28a0b8cc89)
|
||||
|
||||
Citadel Securities Institutional (CSIN) provided execution services to Citadel Securities under a cost-plus agreement..
|
||||
|
||||
huh.... [cost-plus](https://www.investopedia.com/terms/c/cost-plus-contract.asp)..... sounds a lot like a remuneration agreement.... because it is.
|
||||
|
||||
____________________________________________________________________________________________________________
|
||||
|
||||
Let's bring this all together, shall we?
|
||||
|
||||
1. Citadel Securities sells treasuries to "affiliate" parties, such as Citadel Securities Institutional
|
||||
|
||||
2. Citadel Securities marks (most) of their transactions with a 'No-Remuneration' indicator after selling the security to the "affiliate" party.
|
||||
|
||||
3. To FINRA, this complies with TRACE because it looks like a typical transaction without a markup / markdown on the price of the treasury
|
||||
|
||||
4. At the end of the month, Citadel Securities reimburses Citadel Securities Institutional for the cost of their treasury purchases, plus an little more in profit for their services
|
||||
|
||||
5. Citadel Securities records the commission revenue from Citadel Securities Institutional once the treasuries are finally sold to the outside party
|
||||
|
||||
Did you catch the loophole?
|
||||
|
||||
Citadel Securities is able to remain compliance with FINRA because they pay for the services (markup / markdown) provided by Citadel Securities Institutional AFTER the transactions are cleared through this system... they just disguise them as "service fees".
|
||||
|
||||
Instead of paying DURING the transaction, by remuneration, they simply leave it off the books and hide it on their financial statements....
|
||||
|
||||
____________________________________________________________________________________________________________
|
||||
|
||||
If you're wondering where the SEC is in all of this mess, listen up.
|
||||
|
||||
THE SEC AND FINRA ARE BOTH REGULATORY AGENCIES FOR FINANCIAL INSTITUTIONS.
|
||||
|
||||
I am now 100% convinced that the SEC has given the responsibility of investigating fraud to FINRA, while the SEC 'works' on creating the legislation to stop these acts...
|
||||
|
||||
However, it appears the SEC and FINRA are working as totally separate agencies while the SEC is supposed to be overseeing FINRA.... I'm convinced the money flows directly to the SEC from FINRA fines and the SEC is at risk of losing that revenue if they actually start cracking down on these pigs.
|
||||
|
||||
I am presenting a genuine case, here.
|
||||
|
||||
If you're wondering where the auditor (PWC) is in all of this, they just have to verify the statements are FAIRLY PRESENTED. THEY DON'T HAVE TO SAY ANYTHING ELSE! All audit firms are now in the business of consulting, like Arthur Andersen did with Enron. They all sit in a room and discuss the best way to present this sh*t without looking like a giant fraud.
|
||||
|
||||
You want to see how bad the situation has become? Check out this [10K](https://www.sec.gov/ix?doc=/Archives/edgar/data/0001820727/000110465921046086/tm218735d1_10k.htm) (PG 4) from one of Citadel's recent 13G/A filings on 2/16/2021. Keep in mind, this is an acquisition company that *specializes* in purchasing companies that are headed for bankruptcy...
|
||||
|
||||
[](https://preview.redd.it/3as170q7ugr61.png?width=1871&format=png&auto=webp&s=3ba5b3f536def5931ff633895a79bc2f3440f50d)
|
||||
|
||||
MUDRICK CAPITAL ACQUISITION CORPORATION II
|
||||
|
||||
This is so much more than speculation..... Citadel is a *duck*.
|
||||
|
||||
DIAMOND.F*CKING.HANDS
|
||||
|
||||
*This is not financial advice*
|
||||
Reference in New Issue
Block a user