This editorial is brought to you by a former Chief of Police and current staff writer for Law Enforcement Today.
WASHINGTON, DC- This is the swamp that President Trump warned us about.
Fox News and other media sources are reporting that Janet Yellen, confirmed just this week as Treasury Secretary with only a handful of Republicans voting against her received around $810,000 in speaking fees from a hedge fund that bailed out one of the primary “victims” of the recent GameStop “controversy.”
Fox says that Yellen’s financial disclosure showed she made over $337,000 over multiple days last October from Citadel. She made an additional $292,500 in October 2019 and $180,000 in December of that same year.
Yellen was confirmed on Monday by a vote of 84-15, with all Democrats voting in favor as well as 34 Republicans.
Yellen is a deep member of the so-called Washington “swamp” that President Trump tried to oust during his four years in office. Yellen formerly served in the Obama administration as Federal Reserve Chairman.
Citadel, as well as a company called Point 72 dumped nearly $3 billion into Melvin Capital, the company which got clobbered recently when it shorted the GameStop stock, and a group of novice investors hyped the stock on Reddit and other websites. The White House announced on Wednesday that Yellen was monitoring the situation.
Reddit users on a Reddit page called “wallstreetbets” had encouraged users of the page to purchase GameStop shares in order to exploit Melvin Capital’s shorting of the company’s stock.
Wall Street hedge funds were betting on GameStop losing value, and when a stock is short sold, companies are responsible for actually putting up the cash. The hedge funds couldn’t cover what they were betting would happen, so they took a significant hit.
In other words, a bunch of novices beat Wall Street hedge funds at their own game. Melvin Capital was forced to cover their short position by buying shares of GameStop at now elevated prices.
The Daily Caller reported that due to the surge in GameStop share prices, Melvin Capital was on the brink of bankruptcy.
During her daily press briefing on Thursday, White House Press Secretary Jen Psaki was asked if Yellen would recuse herself from advising Biden on the GameStop situation; Psaki refused to commit one way or the other.
Fox also said they reached out to the Treasury Department however they didn’t immediately respond for comment.
The trading app Robinhood was used by the novices to drive up GameStop’s stock, with Citadel doing business with that company. Robinhood announced on Thursday that based on complaints [from the Wall St. fat cats] that investors would be prohibited from opening new positions or buying up GameStop and would only be permitted to sell positions.
Robinhood said they did so to “slow the amount of trading” using borrowed money. The company took similar action against other companies whose shares had been hyped on Reddit. In addition to Robinhood, TD Ameritrade and Charles Schwab also suspended purchasing of GameStop.
Fox News said that GameStop stock rose from $20 at the open on Wednesday to around $350 when the markets closed. On Thursday, the stock bounced between $112 and $483, with the stock trading at $255 around mid-day Thursday. It closed at just under $200 a share at $197.44, losing over 42% of its value from Wednesday.
According to the Wall St. Journal, Citadel and 72Point invested $2.75 billion in Melvin Capital this week after they bled 30% of their capital.
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The Daily Caller said that there has been no indication that Yellen had intervened to help Citadel or Melvin or that she had plans to, however there have been calls on both sides of the issue for more regulation from the feds.
The Wall Street elites have been asking for more scrutiny of platforms such as Reddit and social media sites where users get together to facilitate investment strategies, apparently wanting to shut out novices from the Wall Street money machine.
On Wednesday, Massachusetts Sen. Elizabeth Warren noted that hedge funds and the wealthy have been using the exact same tactics employed by the Reddit users in buying up GameStop.
“For years, the same hedge funds, private equity firms, and wealthy investors dismayed by the GameStop trades have treated the stock market like their own personal casino while everyone else pays the price.”
Warren said that the Securities and Exchange Commission (SEC) and other regulators need “to wake up and do their jobs.”
Fox Business meanwhile reported that Tesla CEO Elon Musk said Thursday that he supported a call by Rep. Alexandria Ocasio-Cortez (D-NY) for the House Financial Services Committee to investigate Robinhood for restricting trading of GameStop stock.
Aside from the restriction on GameStop, Robinhood also prevented investors from initiating new position sin AMC Entertainment Holdings, American Airlines, BlackBerry Ltd., Bed, Bath & Beyond, Express, Inc., Koss Corop., Naked Brand Group, Nokia, Trivago and Tootsie Roll Industries, Inc., allowing investors to only sell.
“This is unacceptable. We now need to know more about @RobinhoodApp’s decision to block retail investors from purchasing stock while hedge funds are freely able to trade the stock as they see fit,” Ocasio-Cortez said in a tweet.
“As a member of the Financial Services Cmte, I’d support a hearing if necessary.”
This is unacceptable.
We now need to know more about @RobinhoodApp’s decision to block retail investors from purchasing stock while hedge funds are freely able to trade the stock as they see fit.
As a member of the Financial Services Cmte, I’d support a hearing if necessary. https://t.co/4Qyrolgzyt
— Alexandria Ocasio-Cortez (@AOC) January 28, 2021
For his part, Musk was backing the Reddit users due to his longtime disdain for short sellers, who previously bet against his company Tesla. Musk called for short selling to be deemed an illegal activity in December 2019.
Here come the shorty apologists
Give them no respect
— Elon Musk (@elonmusk) January 28, 2021
Fox Business said that one user of Robinhood has filed a class action suit against the app Thursday, saying that the company was “purposefully, willingly and knowingly removing the stock GME [GameStop] from its trading platform in the midst of an unprecedented stock rise.”
This is another lesson in the system being rigged for the insiders and fat cats.
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