GameStop Short-Seller Charged With $16M Fraud
The Facts
The US Justice Department (DOJ) has charged Andrew Left, who bet against, or shorted, the GameStop stock, for allegedly making $16M over five years by misleading investors. He faces 17 counts of securities fraud and one count of lying to federal investigators, which carries a total of 370 years in prison.
Prosecutors claim he used his commentary on social media and cable news "to manipulate the markets and enrich himself." He allegedly announced his stock bets and where he thought the prices would go and then closed his sales once they reached his desired price.
The Spin
Narrative A
The GameStop saga exposed the deeply corrupt nature of Wall Street's short-selling industry, particularly regarding "naked" short-selling— where investors sell more company stocks than exist, resulting in an artificial stock price drop. It's about time the government — whose regulators often work or worked for hedge funds — stopped ignoring the crimes of its friends on Wall Street and prosecuted these market manipulators.
Narrative B
Despite what many have heard, the GameStop saga wasn't some corrupt backdoor scheme. Short-selling, when done correctly, is a healthy part of trading that can identify fraud and help others hedge their trades. The inorganic retail trading frenzy of GameStop ended up hurting a lot of novice traders while big firms made millions. Instead of attacking short-selling, we should go after the larger system of central banks printing money for the rich as the poor get poorer.