Home Business The “short-forcing” drama highlights the three persistent diseases of Wall Street.
The "short-forcing" drama highlights the three persistent diseases of Wall Street.

The “short-forcing” drama highlights the three persistent diseases of Wall Street.

by YCPress

The drama of “forcing short” between retail investors and institutions has attracted global crowds, and also triggered debates about short-selling compliance, capital original sin theory, universality of supervision and so on.

Analysis believes that the capital struggle around the “game post station” is making the persistent disease of the U.S. financial market further manifest.

First of all, Wall Street has once again become the cause of disorderly fluctuations in global financial markets.

On the one hand, the trend of “forcing short” is spreading to other markets around the world.

The stocks of other listed companies that are shorted by heavy positions have become the target of retail investors, and even “rubbing hot spots” can make the stock price “turn over”.

For example, the share price of an Australian listed company with the same “Game Post” securities code soared by 60% on the 28th.

On the other hand, short-selling institutions choose to sell high-quality weighted company stocks to “nourish blood” after a huge loss, dragging down the global stock market.

S3 Partners, a financial data analysis company, found that as of January 27, investors who shorted “game post” stocks had accumulated losses of $23.6 billion this year, of which the single day loss on 27 days alone reached $14.3 billion.

On the 27th and 29th, two days after the “Game Post” stock price soared, the Dow Jones Index fell more than 600 points, and the major stock indexes in the European market also fell significantly.

Secondly, Wall Street’s image as a representative of greedy capital has been strengthened.

Many media compared this “forced short” incident with the “Occupy Wall Street” movement nearly a decade ago, highlighting once again that the wealth differentiation and social fragmentation in the United States have intensified.

In contrast to the high unemployment rate in the United States, Wall Street short-selling agencies make a lot of money during the coronavirus epidemic.

Finally, Wall Street’s “forcing short” drama once again exposed that U.S. financial regulation is difficult to reach public expectations.

For several days, U.S. financial regulators, including the Securities and Exchange Commission, have been questioned by all parties.

Short-selling institutions that suffered huge losses claimed that retail investors were suspected of manipulating stock prices through social media to “groups” and sing more “game stations”, but regulators hesitated about it.

Retail investors complained that regulators turned a blind eye to trading platforms’ restrictions and helped institutions short in disguise.