Hedge funds make money by essentially stealing the equity of stock holders. The scheme is really quite simple. They target a listed company that is usually experiencing some temporary difficulties. They “short” the stock. The process is they “borrow” the targeted stock from those with large holdings for a fee and interest. They immedeatly sell the stock. Then with confederates in brokerage house and the MSM such as CNBC and the “financial press”, then begin a selling and disparagement campaign to drive down the value of the stock. When the price is low enough, the hedge fund buys the stock and returns it to the entity they “borrowed” it from. Example borrow 1,000,000 shares at $60/share, sell it obtain $60,000,000 in cash. Stock goes down to 45. Buy 1,000,000 shares cost $45,000,000, return stock to lenders, profit minus expenses about $15,000,000. Nothing created of economic worth, stock holders who sell lose their equity to the Hedge fund.
This is barely legal. The Hedge funds make huge contributions to politicos to avoid scrutiny and investigations. This episode with Robinhood and Gamesstop however will result in some eye opening civil suits and possibly ( but not likely given the current political realities) some criminal prosecutions.
Keeping “title NAME” collateral scam.
The stock , “different” but the same NAME, is returned.
Same entity different value.
THe “sell and disparagement” campaign is illegal, and the SEC has, and does, and always will, go after that with vengeance.
Assuming the disparagement is false. If it is truthful statements, that is called “people warning owners of a company that the company sucks and is not worth what they think it is”.
FOr an analogy, imagine going after and prosecuting people who told their friends and family to stop spending hundreds of dollars for beanie babies, because the whole thing was a giant scam?
That should not be legal.