Meme stock traders thrilled by DOJ’s criminal probe of hedge funds
BNN Bloomberg
The horde of rambunctious individual investors across Reddit, Stocktwits and Twitter are thrilled with a sense of vindication.
The horde of rambunctious individual investors across Reddit, Stocktwits and Twitter are thrilled with a sense of vindication.
They’ve long demanded that authorities rein in hedge funds — who they see as part of the Wall Street establishment that bets against companies in a greedy pursuit of profits. Their voices have especially grown louder in the wake of the trading frenzy over meme-stocks such as GameStop Corp. and AMC Entertainment Holdings Inc. this year.
Now, finally, they believe their words are being heeded. The U.S. Justice Department is said to have launched an expansive criminal investigation into short selling by hedge funds and research firms, scrutinizing their symbiotic relationships and hunting for signs that they improperly coordinated trades or broke other laws to profit.
“I am very excited about this news,” said Brandon Fike, who has been trading meme stocks, taking part in online discussions and watching YouTube channels about them over the past year. “It’s about time someone did something about the hedge funds — people have been discussing short selling and corruption quite a bit this year and meaningful action needs to be taken,” said the English teacher and U.S. Navy veteran who lives in the Philippines.
Meme stock traders targeted their ire at hedge funds en masse earlier this year, forcing several large investors to back down from wagers that companies such as GameStop would fail. A prevailing narrative in the retail crowd is that hedge funds have unfair access to information about companies and are able to keep prices low.
“A lot of stocks have been held down, or a lot of companies that have fundamentals basically don’t move,” said Jeff Robinson, a 40-year-old retail investor from Bakersfield. “You have a lot of retail investors that have their hands in the air. They just look at it as this market isn’t going to move until they rectify short selling.”
