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Comment by TeMPOraL | Hacker News Reader

The loudest opinion on WSB currently is that the hedge funds didn't actually exit their shorts, but are lying about this, and, well, quoting from a random WSB post:

"They didn’t exit any of their short positions! You can look it up!!! The fund sold their shares to other funds, which made the stock algorithm think the stock is being sold —> price goes down —> the found that bought sells those shares again to the fund that sold them in the first place —> price drops even more —> they keep doing that —> price drops lower every time —> but as long as we hold they weren’t able to exit any positions!!! Shorts are still up 120% percent. As long as we hold the squeeze is inevitable!! And if you don’t believe me, look at the GME after hour stock price!"

https://old.reddit.com/r/wallstreetbets/comments/l7oobr/4206...

Whether that's true or are they just driving themselves off a cliff? I don't know.

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> Shorts are still up 120% percent

This doesn't mean that the original funds didn't exit the positions. It's likely that there are many new participants who are taking short positions in the last few days because the stock is obviously overvalued.

I suspect many of these posters are not driving themself off a cliff, but others.

They’ll keep pumping while they have an incentive to do so, and the gullible will follow after, but many of the original ‘hold’ advocates must be planning to exit before the inevitable end, leaving the bag in the hands of a greater fool.

I don't understand why people think Melvin would do this. Sure they might be prepared to flout SEC rules if they thought they could get away with it but whether they sold is trivially verifiable and they would be guaranteed to get caught. Exiting the position was probably also a precondition of the new investors putting money in.

The comment you pasted is incoherent rambling. It's honestly like something from a qanon forum. Even ignoring that prices don't work how they seem to think the mechanism they suggest for manipulating them doesn't make sense (it would also be very illegal and again trivial to verify for the SEC).

> The comment you pasted is incoherent rambling.

That's most of WSB, though (after you exclude all the "+1" comments). I agree it's incoherent rambling, that's why gave up on trying to paraphrase it. I'm quoting it because this is the kind of stuff that gets reposted in every single thread there, and is indicative of the general atmosphere there.

It’s not trivially verifiable for the average person and the average person is used to the rich just flaunting the law with trivial or no consequences.

Saying “but that would be against the rules!” means almost nothing for the rich. This is one of the downsides of not having a strong rule of law and the rule of law has been degrading steadily in the US

It's trivial for the SEC

I don't know if you're implying the SEC is in cahoots with the hedge funds, and not just any hedge fund but one associated with SAC/Cohen whom the SEC went to war with. I'm sympathetic to your general point but as someone who has spent his whole career in the financial markets that seems vanishingly unlikely to be the case here.

He got what, banned from supervising a hedge fund for 2 years for insider trading? If the punishment he received from the SEC constitutes "war" in the financial markets then I don't think you understand the viewpoint that sees the the SEC as handing out trivial punishments.

There is a big difference between handing out light punishments and actively colluding. In the case of Cohen, his light punishment is because they were never able to find the smoking-gun evidence they needed to put him away properly on criminal charges despite a massive effort to do so so they settled for what they could get. It's not enough to be guilty (hi OJ), and Cohen was guilty as sin I don't doubt it.

If the punishments are smaller than the rewards from breaking the rules, then they have no effect on stopping the behavior. They are functionally a small cost of doing business.

I’m sure some funds are still short GME but with small position sizes so they can absorb temporary losses. No way any large fund still has a concentrated short.

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