What is a Short Seller?
The Securities and Exchange commission has recently proposed a new rule (rule 13f-2) that retail investors would be sure to stand behind since it focuses on the idea of short-selling disclosure. What is a short seller? A short seller borrows shares and sells them, because they expect the price to fall later and buy them back. They profit off the difference of buying at the later lower price and paying off the difference of the initial borrowing.
Increasing Short Selling Concerns
Shorting the AMC stock has been of particular concern among the online AMC community who have been suspecting firms of stock manipulation. The Commission Chief, Gary Gensler has increasingly made it clear that the SEC is continuing to take steps to hopefully hold short-sellers accountable. In the last year the SEC and the Department of Justice (DOJ) have probed at least 30 short-selling firms for further investigation.
What is Proposed Rule 13f-2?
The SEC proposed a new rule that would further circle in on short-sellers. The rule proposed said that some investors would be required to report their short sale activity to the SEC each month and in doing so, the SEC would have the detailed short selling information readily available to provide to the public. While retail investors express frustration that there are more shares being shorted than are readily available to trade, there is currently minimal public data that is accessible for retail investors to confirm or deny this. The proposed rule 13f-2 under the Securities and Exchange Act of 1934, would require “institutional investment managers” that hold “a short position of at least $10 million or the equivalent of 2.5 percent or more of the total shares outstanding” in an individual security.
It’s refreshing to see that Gary Gensler and the SEC are continuing to make it their mission to increase the transparency of short-sellers for the investing public. Gensler states,
“Finance is ultimately about trust, and the official sector has a role to help instill that trust through a set of rules on disclosure, anti-fraud and anti-manipulation.”
AMC Short Interest Data
This is exactly the kind of news that the meme stock AMC and GameStop community has wanted to hear since the AMC short interest has recently hit nearly 21%. Which means AMC is currently heavily shorted and has roughly $114.26 million shares that have been borrowed but not yet closed. New rules proposed could make all the difference in 2022 for the short squeeze to happen. The AMC short squeeze is otherwise often referred to as the “MOASS” in the AMC community.