One thing you could do, as a hedge fund manager, is conduct rigorous fundamental analysis of public companies and buy the stocks that you think are fundamentally undervalued. Another thing you could do, as a hedge fund manager in the 2020s, is try to predict which stocks will capture the attention of retail investors online and become meme stocks. A…
It would have been a pretty standard corporate dispute for Wall Street to bet on, if it weren’t for the meme stock crowd. A court’s approval of an AMC Entertainment Holdings Inc. stock conversion plan last week ended a long legal tug-of-war between the movie theater chain and a small army of retail investors, who fiercely opposed the plan and…
Customers who owned stocks such as AMC Entertainment, the former Bed Bath & Beyond, and GameStop claimed in the proposed class action that they lost money because Robinhood stopped them from buying more as social media-fueled trading drove prices skyward. Other holders of the stocks also said they were harmed, because the restrictions eventually caused prices of their stocks to…
As the pros suspected would happen, fundamentals did eventually take over and the meme stocks have mostly returned to something akin to fair value. The only thing that the Redditors proved was that an army of novices acting concert can exploit short-term liquidity constraints to push prices around, but in the long run the stock market does an efficient job…
SEC Charges TradeZero America and Co-Founder with Deceiving Customers about Meme Stock Trading Halts
The Securities and Exchange Commission today charged broker-dealer TradeZero America Inc., and its co-founder, Daniel Pipitone, with falsely stating to the firm’s customers that they didn’t restrict the customers’ purchases of meme stocks when in fact they did. In late January 2021, many brokers restricted investors’ ability to purchase a group of highly volatile stocks generally known as “meme stocks.”…