Source: Wall Street See
The leader returned last month and led retail investors to hype meme stocks like Gamestop (GME) once again, using the E*Trade trading platform under Goldman Sachs, whose massive influence made Goldman Sachs unable to resist removing him from their client list.
Is Morgan Stanley considering removing the leader from its client list?
Last month, the leader returned, and once again used the E*Trade platform, which is owned by Morgan Stanley, to hype meme stocks like GameStop (GME) with retail investors.
The huge trading volume of meme stocks has worried Morgan Stanley, and the leader's influence may cause unnecessary attention, especially since his behavior has already crossed the line of stock manipulation.
After all, the leader has millions of followers on major social media platforms and actively promotes GME. Morgan Stanley is worried that the leader may manipulate the stock price for his own benefit and then sell it to inexperienced investors, which may expose E*Trade to unknown risks.
The U.S. Securities and Exchange Commission (SEC) is currently unable to deal with the influence of the leader, and cannot determine whether the sharp rise and fall of GME constitutes market manipulation.
E*Trade can only solve the problem itself.
According to insiders, in order to avoid unnecessary troubles, E*Trade is conducting an investigation and is considering removing the leader from its client list.
Morgan Stanley's employees found out through compliance channels that the leader had already bought a large number of GME call options on E*Trade before the leader's return in May, which means that the leader may have held a large amount of floating profit during the week when GME soared.
The leader confirmed this speculation. On Sunday, he posted a screenshot of his trades on E*Trade, which included 5 million shares of GME purchased at a cost of $21.27 per share, worth up to $115.7 million. He also has 120,000 GME call options with a strike price of $20, which will expire on June 21, with a total value of about $65.7 million. The floating profit exceeded $6 million.
Morgan Stanley has not yet made a final decision on removing the leader from its client list, but Wall Street's view of the leader is gradually changing.
Clifford Asness, the fund manager of the hedge fund AQR, angrily criticized the leader as a "social media fraudster," and believes that the leader's hype and selling is crazy.
Another day trader, Dave Portnoy, also joked on social media, wondering if he was already being watched by the leader.
Editor/Lambor