Welcome back to the channel everyone today, i want to talk about the sec, finally, stepping and doing something as they've just charged two individuals for a fraudulent trading scheme involving meme stocks, although, unfortunately, it's not quite as perfect as we might have hoped so stay tuned. And let's make some money, but before i dive into the video, if you haven't already be sure to sign up to moomoo using the special thomas james, investing promotion. Not only do you get a free stock worth up to 350 and not only do you get a second free stock with a guaranteed value of 50, but you also get a third free stock with another guaranteed value of 30. On top of that, all you have to do is sign up to moomoo and deposit at least 100 to get those guaranteed free stocks.

You could also sell those free stocks and get two entirely free shares of amc just for signing up and depositing linked in the description below, and i want to dive straight in with the key information. So, let's start by reading through the sec press release and then i'll go on to explain why it's not quite everything we'd ever hoped for so the sec charges, two individuals for a wash trading scheme involving options of meme stocks, the sec today charged a florida resident And his friend for engaging in a fraudulent scheme designed to collect liquidity rebates from exchanges by wash trading options of certain meme stocks in early 2021.. According to the sec's complaint filed in february 2021, soy and goo became aware of the increased market volume and volatility driven by so-called meme stocks. Goo, allegedly, then devised a scheme to take advantage of the maker take a program offered by exchanges by trading options of these stocks with himself under the maker taker program.

A trade order that is sent to an exchange and executes against a subsequently received order makes liquidity and generates a rebate from the exchange, in contrast, an order that is immediately executed against the pre-existing order, takes liquidity and is charged a fee. The sec's complaint alleges that goo was able to generate illicit profits by using broker-dealer accounts that passed rebates back to their customers to place initial orders on one side of the market and then using broker dealer accounts that did not charge fees for taking liquidity for his Subsequent orders on the other side of the market, so he was basically using two platforms to trade between himself. He was using one platform that generated rebates for himself and used another platform that would usually charge fees, but he found a specific platform that did not charge fees when identifying a product to trade goo and his friend and business associate young lee selected far out of The money put options on some meme stocks, which they thought would be easier to trade against themselves, because interest in buying the meme stocks and related price increases would make put options on these stocks less attractive. After certain broker-dealers closed goo and lee's account in early march 2021, goo was able to continue the scheme through mid-april 2021 by lying to broker-dealers about his trading strategy using accounts in the names of other people and accessing these accounts, through virtual private networks or vpns.

To hide his activity, the complaint alleges that goo executed approximately eleven thousand four hundred trades with himself netting, at least six hundred and sixty eight thousand dollars in liquidity rebates and that lee his friend executed approximately two thousand three hundred trades with himself netting. Fifty one thousand dollars in liquidity rebates in addition to collecting these ill-gotten rebates, the wash trading scheme allegedly impacted the market as it skewed the volume in certain option, contracts and induced other traders to place trades in otherwise illiquid contracts as alleged in our complaint. Goo and lee engage in a deceptive, wash training scheme to game the exchange's maker taker programs and take advantage of market conditions associated with meme stock trading. This case demonstrates the sec's ability to quickly investigate and expose complex trading schemes, including those conducted during times of significant market volatility, the sec's complaint charges goo and lee with violating the securities exchange act.

Lee got a 51 000 fine and 515 dollars in pre-judgment interest and a civil monetary penalty of 25 000 and the sec's litigation against goo is continuing. Now there is a few good points in this press release and a few good results that i noticed as well. So, let's talk about them now, the first one, which is a downside, is that, unfortunately, this is not the sec charging, ken griffin and vlad tenet and sending them both to prison and disbanding citadel ordering them to cover their short positions. No, unfortunately, it's much more small fry than that they've gone after two individual people for wash trading.

There's a quote that i was trying to find from the wolf of wall street, but unfortunately i can't find it. But i'm sure you will remember the scene where jordan belfort directs the sec investigators into that freezing cold room in his office, and he says, while those fcc investigators were looking for a smoking match inside his office, he was letting off a bazooka in the room next Door - and that is exactly what's going on here - goo and lee were lighting that smoking match, while ken griffin is letting off a bazooka right under the sec's noses. However, something that is slightly positive is the chief of the sec's market. Abuse unit said that this case demonstrates the sec's ability to quickly investigate and expose complex trading schemes and therefore it shouldn't be beyond the sec's capability to quickly investigate and expose the complex trading schemes going on against amc stock.

Although short ladder attacks and naked shorting and something else that is slightly positive, is that lee actually got a fairly big fine, he generated 51 000 in profits and was made to pay back those 51 000 and an additional 25 000 on top of that. So, potentially for once in the sec's history, somebody has actually lost more money in fines than they made in profits. Typically, in the past we've seen large corporations make billions and billions tens of billions or hundreds of billions of dollars in profits and only pay a small fine of a few million dollars. And it does also show the sec are actually doing something and investigating meme stocks and the sketchy practices and sketchy trading schemes going on behind them.

And we also know there is an investigation going on to the excessive short selling and trading of put and call options. In amc, stock and gamestop stock as well, obviously, this was disclosed in the gamestop court, two financial statements and on the amc website a couple months ago. So hopefully, the sec are getting to the bottom of this investigation and will be bringing some criminal proceedings against ken griffin and others like vlad tennef, and i also wanted to quickly touch on and talk about, the hashtag ken griffin light. I think this is a brilliant movement, as it brings more media attention to the fact that ken griffin lied under oath.

If this can remain trending on twitter for the next few days and the next few weeks, then it will bring far too much media attention to the topic for the sec to ignore it. Now i have seen some tweets about twitter, suppressing or removing the hashtag ken griffin lied and removing it from trending, but i'm not 100 sure that that's exactly how twitter works. Twitter does work in very funny ways. Sometimes it shows things as trending when they aren't, and sometimes it shows things not trending when they are, and sometimes it will show as trending on my screen, but won't show it's trending on your screen, for example, but it will show as trending on other people's screens As well, i don't really think the twitter algorithm is 100 perfect.

All i know is that this was trending and i do believe that it still is trending as well, even if it is removed from the trending page. I think it's important that we continue to post the hashtag kengriffinlide. If i post this hashtag, then my followers are gon na see it, and if my followers retweet my tweet, then their followers are gon na, see it as well and then, if their followers decide to retweet it onwards as well, then there's another line of followers that Continue to see it and therefore, even if it isn't necessarily trending the retweets upon retweets upon retweets upon retweets, will continue to spread the message, and i also wanted to touch on evergrande as well. We've got a tweet from unusual wales, saying breaking news.

Evergrande's chairman pocketed. Eight billion dollars in dividends during the evergrande collapse, while forcing employees to lend the company cash as well as freezing their pay. I think that is absolutely atrocious, that the chairman was stealing money for his employees and using that money to pay himself out some dividends, and it also looks ever more likely that the evergreen collapse is approaching us hour by hour. Now.

I also wanted to go through some additional due diligence by the last best standing banks. In theory and in practice. Theory banks play a crucial role in a country's economy. They take money that is not currently being used and lend it to others through extending credit.

They are allocating resources, but importantly, they are also responsible for assessing the value of capital. They have len example: a bank lends a hundred dollars and that money is used by the borrower to generate value that ensures the bank is repaid the hundred dollars with interest, but that doesn't always happen. It's up to the bank to constantly reassess the value of that loan and the likelihood they will be repaid in accounting. This is called valuing something at fair value or just recognizing.

Provisions against any doubtful receivables taken in aggregate banks are the bookkeepers for a country's credit expansion, ensuring that credit leads to productive growth and bearing first losses for bad debt when done properly. This creates a market-based structure of healthy credit expansion and economic growth. Although accounting is a description of reality and it does not dictate reality, evergrande never reported a loss, but is insolvent. Similarly, whether a bad loan is properly recognized does change its ability to be repaid.

Losses are incurred, whether or not they are recognized in accounting. If you've given a loan out - but you know you aren't going to receive it, you should obviously really write off that loan because you aren't going to get it back, but in accounting you can still leave that loan there at full value, although you really shouldn't, but It does happen more often than not. When banks conceal losses, it adds to systemic instability by misrepresenting losses to shareholders, counterparties, regulators and society in general. This compounds the problem by allowing asset values to remain overstated and capital continue to be misallocated or capital continues to be misallocated.

Banking failures occur when losses are recognized as in recognized with the accounting and not when they are actually incurred in the us, shoddy subprime loans. Fueled over investment in housing and inflated housing prices from 2003 to 2006, but banks failed years later when they were forced to recognize these losses. In practice, the losses of unproductive investments in china has already been incurred. The country's collective resources have already been spent on rebar and cement for unneeded housing, whose market value depends on continued expansion of debt to citizens to buy them.

This reality cannot be undone. The money was already spent. The fact they incurred losses today have been concealed, which makes matters much worse by overstating the health of the financial sector and housing prices in china. Consider the following article on bank responses to evergrande's missed payment ag bank has made some loan loss provisions for evergrande's debt.

Meanwhile, ming cheng and city have agreed to roll over evergrande's near-term maturities and therefore have not recognized that right down or provision on the debt. The three banks likely have the same recovery prospects for their ever grind a loans. The difference is, is that aeg bank is recognizing these losses that others are pretending have not occurred, perhaps because the impact of the smaller banks is much more significant. Now consider the overstated value of inventory on the balance sheet of all property developers.

One man's inventory is another man's collateral. The ability to monetize this inventory is near zero and the process of liquidation, crushes the real estate market and spreads contagion, and the reason why evergrande did not write off this inventory earlier is because they wouldn't have been able to get loans if they had written it Off the fact they overinflated those assets meant that they could borrow more debt against that over-inflated asset price, and this is also what's going on with chinese banks as well. They're still recognizing those massive over-inflated loan recovery balances that probably aren't recoverable just so they can get more loans themselves to give out more cash and create more loans than you know, loans that they're giving out as well - and this is effectively a vicious vicious cycle where The chinese government has stepped in by setting those new ratios and rules and therefore that's why we're seeing so many property developers in china and potentially banks as well, starting to be in a lot of trouble. Guys be sure to.

Let me know down in the comments below what you think about the sec actually taking action and issuing some fines and, while you're down there be sure to sign up to moomoo using this special thomas james. Investing promotion sign up open the account deposit, at least a hundred dollars, and get your free stocks and, as always guys, if you enjoyed this video, be sure to check out some of my others. Alternatively, subscribe the channel and ding that notification bell, because that way, you'll be alerted. When i upload a new video cheers.