I can't see how that's the case. They aren't going to suffer for this, let alone personally.

Even if the fund tanks, they can set up a new one, probably with sympathetic money or just cruise off into the sunset with their millions.

They're so disconnected that losing billions doesn't matter?

The problem is bigger than originally conceived then.

Its nice that more people are coming to this realization, though I'll admit that it's a bit funny that this, of all events, is what's making people realize that extreme wealth disparity is a problem.

The existence of billionaires isn't even good for the free market, let alone free society. In order for a market to be rational, the threat of losing money has to actually mean something, which it doesn't for the ultra-rich.

Eh. The problem isn't that billions or billionaires exist at all. I see no issue with that.

The problem is systems that resist merit. You make terrible investment decisions with the portfolio but it doesn't matter? (I think it will matter FWIW.)

In what way do you think it will matter? Can you be more specific?

He'll be regarded as the moron that shorted a stock 140%(!!!) and then got caught

There doesn't seem to be any singular person in this case to assign such fault to; best I can tell the over-shorting was caused by multiple firms acting independently, and I'd guess that the orders were signed off on by multiple people at each firm (and I'm not inclined to suspect any collusion here; in a thunderstorm people sell umbrellas, and in a pandemic people short retail).

In the meantime, the billionaire owner of Citadel (the company that just made tons of money by front-running all these retail investor trades via their data harvesting contract with Robinhood) just used some of that freshly-acquired cash to buy a stake in Melvin (the company that those retail investors just tanked) for pennies on the dollar. The feel-good rage of WSB serves as a convenient smokescreen for the rich getting richer.

> The problem is bigger than originally conceived then.

You're starting to get it.

It matters to the investors in the hedge fund. It matters a lot less to the people running it.

Wall Street is driven by money, relationships, and reputation. Obviously, Plotkin lost money here in terms of his this-year payout. But I believe he also takes a hit in other ways.

On Money: Plotkin's fund lost money for his investors, all of whom are rich people who will be upset with him. There will probably be some redemptions, and AUM will go down -- not just because he lost some of it, but because investors will pull out some of what remains.

On Reputation: Plotkin ends up with egg on his face because he held the bag for a bunch of mom-and-pop investors on Robin Hood. You know how Soros is known for famously breaking the Pound Sterling? Plotkin is now known for infamously being broken by GME.

On Relationships: Plotkin lost even after getting an injection of liquidity from Cohen and Griffin. That can't be good for his standing with those two power players.

"Hedge fund managers typically have a substantial amount of their own capital invested in the funds they manage, and a significant portion of their compensation is based upon the absolute, or positive, performance they achieve for their investors. As New York Attorney General Eliot Spitzer observed recently, the interests of hedge fund managers and their investors tend to be "aligned", largely due to this combination of the managers' commitment of capital to their funds and the performance-based compensation structure."

https://www.sec.gov/spotlight/hedgefunds/hedge-mfa.htm

Loosing billions still hurts a lot I would guess.

The fund and it's investors may lose a lot. The people running the fund will not. But it's important to remember that it's a matter of scale here. Billions is a lot to a midwestern retail worker who put half his rent check into a volatile stock. It's not a lot to large groups of already-wealthy investors who have a portion of their portfolio invested with this one fund.

It's not their money, it's the money from LPs who invested in the fund.

If you know the term LPs you should know the typically senior management at hedge funds have a significant portion of their net worth invested in their own funds.

You don't think losing his fund would have any personal or reputational effect on him, just because he has plenty of money to live, or do something else?

I don't buy it.

While I enjoy the esprit de corp of this particular discussion, the recurring allusions to "David vs Goliath"-esque tales are rather cringe-inducing and really speak to the maturity level of those involved (if that wasn't already clear by their "tendies").

The image I have in my head is less LOTR defenders or David(s) vs Goliath, and more of a horde of zombies that broke through a barrier and jumped some guards, but are about to be mowed down by a well-armed group behind a barricade. This isn't going to end well for the retailers - but hell if isn't sending a message.

Also the collateral damage is going to be more interesting to follow than the financials themselves. Already Discord and RobinHood painted themselves as enemies of the people - whether this was their least bad option legally, or they were influenced by Wall Street is immaterial - it's already viewed as the latter. Couple that with other high-profile bans by social media platforms this year (and it's not even February!), and I can see a lot of regular people all across the political spectrum who feel abused by big, rich companies. I think the last time we saw this kind of energy on the Internet, it led to Scientology protests, Occupy WallStreet and the Arab Spring...

I would have imagined you could read the business category of any major news outlet on any given day and see the fallibility, but I think you're right that that may be a common interpretation of this event.