If you've been following the saga of the apes of gamestop of amc, you know it is intimately tied with the developments of kind of insidious actions on the side of the shorts and some other things such as robin hood. Taking away the buy button. But there's big intricacies to this world and one of them is very much this concept of aggressive, manipulative shorting and that's something that has been a thread. A pillar of what this community has been arguing about, trying to get people to look into it.

And what's awesome about it? Is this all really got going? Got mainstream media attention a little bit over a year ago, so fast forward? To this moment there is some serious regulatory justice movement in this world of potentially manipulative shorting. So i really i'm actually pretty excited to be sharing this story with you, justice department is pursuing wide-ranging investigation of short sellers sources, say muddy waters, carson block served with a search warrant in the probe of illegal trading tactics. So i know, like i said, there's a myriad of things that the apes are trying to point out, for example, payment for order flow. It's just another one, but it doesn't particularly relate to this.

That's more of a structural thing. We've been talking about pattern day trading, the interesting lack of information in 13f, the opaqueness of ftd reports. I get it it's a whole bag of things, but one of them is clearly what's going on with shorts and are all their tactics and strategies truly above board and a lot of people, maybe for very good reason, have been saying no way jose well recently, over The past couple of weeks, we have been getting developments of the department of justice, the doj they're starting to get involved, which to me to my understanding of how the system is set up, that's pretty big. Usually this is an sec thing and now, when the doj is getting involved, that's really rising.

Some eyebrows, like it's getting people saying whoa. What is going on here - and this is tied with like as the numbers are going up, they're looking into more and more and then it's relating to these other crazy stories. Well, this is the most recent installment of this whole crazy debacle and it's very interesting to dive into federal prosecutors are investigating whether short sellers conspire to drive down stock prices by sharing damaging research reports ahead of time and engaging in illegal trading tactics. People familiar with the matter, said so think of these big, these big groups, these organizations and there's like i guess i have to say the word allegedly a lot in this, because it's actively a legal case but think of your sichon research, your hindenburg, your muddy waters Of these people, who really as soon as they say, there's against something they have such of a following.

They have such a clout that the stock ends up. Tanking i've seen this many times myself in real time where i've just been buying a stock and then all of a sudden you're like hang on citron, just tweeted, that they have a new research report on company whatever and that company tanks, just because they have that. Much of a sway within this particular industry. Well now there's people pointing out that it might be even worse than that there might be people actually sharing their research reports and there's now new accusations of where hedge funds paying them to write these things.

It gets super super wild, but this is what you need to know from a high level. One tactic under investigation is spoofing in a legal ploy that involves flooding the market with fake orders in an effort to push a stock price up or down. Now i have a little bit more of an explanation for this. Spoofing is essentially high speed, bluffing in which one trader dupes others into transacting at artificially high or low prices.

A spoofer, for example, might offer to sell a big block of shares at 10 when the last sale was at 1003.. After other sellers rushed to match the lower price, the spoofer quickly pivots cancelling his sell order and instead buying it at ten dollars price. He generated with the fake bid repeated enough time. Spoofing can produce big profits.

Obviously this tactic is illegal, but people are still doing it. It's been outlawed since uh 2010, but in 2020 the justice department had charged 20 people with spoofing related crimes and collected more than one billion dollars in fines from banks and other financial institutions. So this once again, this is just like one little example of the type of thing that is played out. I'm not saying this is it, and this is exclusively the issue, but when you pair that up with that's their their tactic in terms of like market structure, and then you add that, together with this type of thing, where potentially allegedly getting paid to write some of These reports sharing the reports with other people, so you have more money, driving an equity down or up just manipulation in general.

This is crazy, so carson block the fiery short seller behind muddy waters uh. He was another person recently served right here, served with the search warrant by fba. Argent. Excuse me: fbi agents.

In october, federal agents took computers belonging to andrew left of stitch on research. He was another one. So a lot of these people, these, like kind of short report or, like you, post a report and you're an aggressive short seller, a lot of them getting questioned by the doj as we speak, never uh the most popular camp on wall street sellers have been an Essentially, bruising few years, so i wanted to bring this part of it up, because i want to make it explicitly clear where i am am i matt coors against shorting? No, i am not. I am not whatsoever.

I am against manipulative short selling. If you think a company is going to go down because it's being overvalued, if you think they have questionable sus accounting practice, if you just think they're in a bad industry, if you think they're in an industry, that's just going to be less popular. I am fine with that. You in the free market have the right to bet.

If you think something's going up down or sideways. I am not generically against shorting. I am against manipulative shorting, i'm against manipulation. It doesn't matter if the manipulation is pushing the stock up or down.

I shouldn't even say, manipulative shorting, i'm against manipulative tactics, i'm against manipulative training. I want a true free market, not something that's being manipulated. So with this. Yes, i get it short.

Sellers have been beat up and i think some of them deserve to be beat up by the justice system by people like me streaming. But there are other ones who they're actually just finding fraudulent companies, and i don't care if they make money on the way down. The company is fraudulent good, but it's been an interesting year with the connotation around shorting. Still they can play a crucial role in uncovering corporate frauds.

One short seller helped turn up the heat on enron. That was a good short. We could talk about luck and coffee. Honestly, the list goes on and on others were early to sound the alarm in the 2008 financial crisis and most recent scandals, including wirecard ag.

The list is long of ones that were good legitimate shorts, but that is completely different from the world of this type of manipulation that we see there. They are two very, very distinct things: moving on columbia, law, school, professor joshua mitz, who published a 2020 academic paper entitled short industry that was critical for short selling tactics. If you haven't heard of him yet we actually recently covered another story of his um kind of related to the sec. More of a game stop thing, but anyway, more specifics than this, he has been advising the justice department in its investigation.

People familiar with the matter have said mr mitz has in the past, also served as an expert for companies and executives. So this is a columbia law school professor who has been really learning about the tactics or at least some of the tactics, manipulative insidious tactics that go on in the market and the fact that we're just seeing his name over and over again. I actually think it might be an interesting person to try to reach out to and bring on for an interview on this channel. So if you have any weird connection to the columbia law school, professor joshua mitz, let me know because i think he could be an awesome awesome interview and really share some of his knowledge with us as long as it's not an ongoing case.

But overall i wanted to cover this because it does relate to manipulative shorting in the market, something i am clearly vehemently against and it looks like some of them are about to have to answer some very painful questions from the department of justice. Obviously, let me know your thoughts in a comment below you.