USA Reddit's 'revolution' on GameStop shakes Wall Street's foundations
began as the reason but has ended up becoming the excuse of a pulse between investors that shakes Wall Street these days.
On the one hand, a group of investors organized in the social network
under the name of
, and on the other, the large funds and investment banks that have lost billions of euros these days.
Could something similar happen in Spain?
We review some keys.
What has happened on Wall Street?
A group of investors organized in the network
social Reddit decided to launch an offensive against large investment funds, banks and
who for months have been betting against the company
to profit from its hypothetical fall.
Many took the offense as a kind of game that would not go further, but its intensity has been increasing to such an extent that many of those funds and investment firms have
lost billions of dollars
and the main Wall Street indices ended Wednesday's session with losses of more than 2%.
The story starts from GameStop, a chain of video game and electronic product stores that was on the brink at the beginning of the pandemic and that managed to overcome during 2020 after the arrival of its shareholders of
entrepreneur and founder of the online pet food store Chewy.com.
Despite the recovery, a group of
traders, hedge funds
and riskier investors continued to bet on the fall in value and did so through
short buying and selling.
What is betting short?
It is a speculative practice that consists of borrowing shares from a company, selling them en masse to cause their price to fall, and then buying them again for a cheaper price.
The gain - in this case for the
traders, hedge funds
and investors who bet against GameStop - is the
difference between the first price and the second.
In a simplified way, the bears (this is how this type of investor is known)
earn more the more the stock falls
and lose more the higher it goes.
And that is what has happened on Wall Street.
What does WallStreetBets do?
Their offense is based on
buy stocks outrageously
to raise its price and thereby prevent bears from achieving their speculation target.
In fact, they are causing the millionaire losses that we are seeing these days in funds.
Could something like this be organized in Spain?
A group of investors could agree on a series of investment strategies and put them into practice.
Now, we emphasize that "technically" because it is not so easy to organize something like this and because, if it were carried out, it would have consequences for them.
National Stock Market Commission
(CNMV), which supervises the functioning of financial markets in Spain, refer to the EU regulation to explain these consequences.
According to this regulation, "the mere attempt to place the value of a share at artificial levels, and of course even more so if it is successful, individually or in a coordinated way, be it up or down,
would constitute market manipulation
". The administrative sanctions for market manipulation are included in article 302 TRLMV and in the case of the fine
it can go up to 30,000,000 euros.
, the crime of market manipulation (article 284 CP) is punishable by imprisonment from six months to six years, a fine from two to five years, or three times the profit obtained or favored, or the damages avoided , if the resulting amount is higher, and special disqualification to intervene in the financial market as an actor, agent or mediator or informant for a period of two to five years.
To continue reading for free
Sign inSign up
subscribe to Premium
and you will have access to all the web content of El Mundo
According to the criteria of The Trust Project