Welcome back to the channel everyone today i want to talk about the department of justice investigating melvin capital. Now you might say well tom. That sounds like a very click bait title, but actually melvin capital have been specifically named in the department of justice investigation, so stay tuned and let's make some money today. I want to talk about why the department of justice are investigating melvin capital.

I also want to talk about what that means for melvin and what their investors might do when they find out that melvin is being investigated. I then want to talk about what might happen to melvin capital when their investors take certain actions and what that means for the amc squeeze, and now i want to dive straight in with the key information. So to start us off lucy, commissioner, has tweeted saying naked shorts. U.S criminal authorities are gathering information on contacts among dozens of short-selling hedge funds and research outfits as they investigate possible trading.

Abuses includes melvin. So if we head on over to this financial times article, it says the department of justice has sent subpoenas asking for information about a list of more than two dozen firms to a smaller group of market participants. Among other things, they are asking for calendar information and communications. So basically, the department of justice is asking many many hedge funds in the field when they've had communication with some of their listed two dozen hedge funds or two dozen short sellers.

So, basically, the department of justice is asking hedge funds in the market, such as citadel. What kind of communication they've had with melvin capital? He says the list of names includes some of the best known firms that publish negative research and funds that seek to profit when individual share prices fall among them are muddy waters, melvin capital, hindenburg research and citron research as well. Now, obviously, this is just a list of four firms, but so far the department of justice list includes two dozen firms and is also incomplete and they plan to investigate more. It says the doj and the sec who bring civil market manipulation.

Cases appear to be looking at whether the firms are coordinating or acting in a way that violates securities laws. Now this is something we know is happening. We know that citadel and melvin capital and many other short hedge funds. Currently shorting amc are coordinating and working together.

We know there has to be coordination between hedge funds and market makers in order to create those synthetic shares and in order to perform naked shorting. Now i think this is a really really big deal when this lawsuit dropped. I thought the sec and the doj were just investigating short selling research firms like hindenburg research, but actually it now seems that the doj are actually investigating firms like hedge funds and market makers that are actually coordinating and working together now. I also think this is good because obviously, the sec can only bring civil market manipulation cases, whereas the doj can bring criminal market manipulation cases, meaning the sec.

Don't actually have the power to arrest and imprison anyone and obviously the sec have taken a look at. What's here and they think people need to go to jail and they think the doj needs to get involved guys if you're worried about holding your amc infidelity due to all the recent glitches and the fact that fidelity actually supports short sellers mumu are currently buying and Giving you a free share of amc on top of their usual five free shares when you sign up to moomoo, using the link in the description below and make your first deposit when you sign up to moomoo and make your first deposit, you get. Two free shares valued up to three thousand five hundred dollars each. If you can deposit a hundred dollars, mimi will also buy you a free share of amc and guys.

If you can deposit the full two thousand dollars, then you also get three free shares. On top of that worth 500, each moomoo is also a brilliant commission free trading platform that doesn't make its money from payment for order flow, moomoo and futu make their money from margin interest and from payment fees, and therefore you don't have to worry about your trades. Going through sketchy, dark, pools or being given to citadel moomoo also has excellent technical indicators and advanced charting tools. Moomoo also publishes daily short selling data on top of a number of other key indicators and therefore you can currently get up to seventeen thousand five hundred dollars in free stocks and a free share of amc just for signing up with moomoo.

Using the link in the description below and as corey says to everyone asking me my thoughts on names released by the doj, let me say this obviously corey doesn't work at the department of justice, but you never release names at the beginning of an investigation. You only release names near the end of an investigation, purposely to watch what they do and where or who they run. To now that melvin capital have been named in the department of justice, investigation and probe, it will be very, very interesting to see how melvin capital and gabe plotkin react and whether they run to ken griffin and citadel for advice. Obviously, we know that melvin capital and citadel aka ken griffin are working together in order to create these synthetic shares and in order to naked short amc shares.

Now you may say: well tom: wasn't this department of justice investigation only released a few months ago at the back end of the autumn or in the beginning of the winter? Doesn't that mean it's going to take many many months, if not a year or two to perform this investigation and actually make some arrests, but as unusual wales, tweeted breaking news andrew left, the founder of citroen research, who famously shorted gamestop actually had his computers seized from His home in early 2021, due to the fbi investigation into short selling. Now i'm not sure if this means department of justice investigation or whether the fbi are also involved and also performing their own investigation. But it's interesting to see that actually andrew left and some other short sellers have had computers seized, not in early 2022 but in early 2021 and therefore it seems the fbi. The department of justice and the sec have actually already been investigating short sellers for well over a year and therefore, as corey said, maybe they're not at the beginning of this investigation.

They've obviously been investigated for a year and they're now actually arriving at the closing point of the investigation and they're waiting to see who else is affiliated. Obviously, charles gasparino said correction. Neither citadel nor its associated hedge fund is on the aforementioned list. Sorry for the confusion, but citadel knew what i was saying and have no comment, but as stonks batman said technically, some of citadel's colleagues, such as melvin capital are currently named on the list and therefore it's likely not long until citadel is named on the list as Well, especially because the department of justice stated their list is not yet complete and there's another tweet that says they will announce that citadel securities is under investigation soon enough.

I said it months ago. They are building a case and feds do not announce their endgame. No matter what pathetic pathologic lies from fox business say now we wait now. Obviously i think this is brilliant.

That melvin capital have actually been named in the department of justice investigation into short sellers, but i wonder what that means for their investors and i wonder what that means for melvin capital. If you personally were invested into melbourne capital - and you just found out, they were being investigated for fraud and market manipulation. What would you do now? There may actually be some of you that watch my video that were invested into enron before they went under and before they were found out for all of the fraud they were committing. If you were invested into enron, you'll know that you've probably lost most, if not all, of your money and therefore, if i was invested into melvin capital right now and i had just found out, there would be an investigative fraud.

I would probably be trying to pull my money out as fast as humanly possible and i'm sure that i wouldn't be the only investor that would also be trying to pull their money out all at the same time. Now, obviously, if lots of melvin capital investors want to withdraw their money, then melvin capital are going to have to sell off some of their assets in order to meet those withdrawals. Now, that's obviously going to cause lots of these stocks to crash, which obviously means that melvin capital are going to struggle to meet their margin requirements as those stock prices fall and as their cash balance reduces more and more because of those investor withdrawals. Now, actually, just thinking of it you'll know the other day in my video i spoke about how melvin capital were heavily invested into snapchat meta platforms or facebook and block or square now.

You'll. Remember that the stock saw massive massive losses on the thursday and the friday with facebook at one point down nearly 26. Maybe that was actually a sign of melvin capital selling off massive massive blocks of facebook in order to meet those investor withdrawal requirements when they sold off massive chunks of facebook. Obviously, the facebook stock started to crash because of all these giant giant melvin sell orders as more and more investors want to withdraw their money from melbourne.

Capital melvin will have to start selling off more and more of their positions and may even have to cover their amc shores, obviously covering their amc. Shorts isn't going to be melvin capital's first priority, because that's the position that would end up bankrupting them. It's more of a last resort play, but if so many investors do withdraw from melvin and they get margin called, they will be forced to cover their amc shores and obviously, when melvin are forced to cover their shorts. That'll, obviously skyrocket.

The price of amc due to melvin holding such a large short position in amc and then obviously, as amc, starts to skyrocket when melvin capital covers that'll, obviously cause many other hedge funds to be required to cover their amc shorts as well, because, obviously, as the price Of amc starts to skyrocket, other hedge funds are going to struggle or fail to meet their margin, requirements and end up getting margin called and also forced to cover their amc shorts, especially as other hedge funds are also likely already invested in snapchat meta platforms or facebook, And block or square they're, probably already likely, starting to feel the pinch of margin requirements guys be sure to. Let me know down in the comments below what you think about the department of justice investigating melbourne capital in their short selling probe and as always guys, if you enjoyed this video, be sure to check out some of my others. Alternatively, subscribe to the channel and ding that notification bell, because that way, you'll be alerted when i upload a new video cheers.