Over the past two weeks the department of justice, SEC and other regulators have been coming down hard on financial firms such as hedge funds. Morgan Stanley and many other funds have been sent Subpoenas earlier this year already. As of Yesterday (2/17/2022) A Bloomberg report confirmed that the infamous Citadel is now also on the DOJ list of firms that is allegedly being looked into also.
Citadel and the Amc retail investors have been at odds with each other for various reasons over the last year. Citadel even went as far as to compare the retail investors to “Conspiracy theorist” earlier last year.
Bloomberg: The tweet that confirms Citadel is under investigation by DOJ
THE CRACKDOWN HAS STARTED!
SEC SUBPOENAS MORGAN STANLEY & GOLDMAN SACHS PLUS OTHER WALL STREET FIRMS.
Goldman Sachs and Morgan Stanley among others are apparently being looked into on trading practices. Both firms are trading lower after hours as Wall Street Journal report that “federal investigators are probing the business of block trading on Wall Street,” with the SEC Looking into and subpoenaing both Goldman and Morgan Stanely to name a few of the firms.
Tough Times for Shorts
The U.S probe could not come at a worse time for some of these firms that have been partaking in short selling. Many funds which bet of bearish trends in the past year or so have lost out on tons of gains they could have seen on the upside and even worse have been hit with crippling losses. Hedge fund Melvin Capital has had a rough time in the market to say the least. 2022 is no different with an over $1 billion dollar loss the fund has seen in just the first three weeks of the year.