And further, these were large sophisticated investors that should have known when to get out and take their losses (as Melvin eventually did). For us small time folks we can do a limit short so that our risk exposure is limited.
EDIT: This is the story: https://www.cnbc.com/video/2021/01/27/melvin-capital-sells-o...
It's full of plausible deniability phrases like "from what I understand" and it's very much a game of telephone. They could easily say "when I meant we were out of the stock, I meant that we had covered some of our positions" or similar.
I can't find a non-hearsay source anywhere, neither written nor in the form of a recorded interview.
I’ve yet to find an actual statement from Melvin.
Perhaps I'm naïve, but I think to lie about such a thing would pretty clearly fall afoul of the law?
A single false statement or two, said to a reporter as a confidential source, would be much more difficult to prosecute. The reporter might not willingly give up their source, and the company could deny everything, fire the person who "inaccurately represented our position", and claim the party acted of their own volition. Modest fine, at best.
Most of what WSB is doing is market manipulation but from what I've read it isn't something the SEC will go after in court as fraud is not clearly involved.
This is, unfortunately, going to be a situation where the sophisticated investors win out, and the people they cajoled into buying stocks will be left holding the bag. Gamestop could not reorganize quickly enough to assure investors that they actually have the ability to capitalize on this influx of investment, especially not with a historically terrible business performance.
The above has happened, but it is rare. Not letting your broker deal with holding the stock for you is a big hassle.