Re:GameStop Investors Who Bet Big–and Lost Big
by newacct583 on Tuesday February 16, 2021 @12:32PM
(#26156394)
I don't think that works. I'm not an SEC regulator, but I don't believe there's any requirement that the brokerage hold real shares for the full total of all outstanding sell orders[1], or to logically segregate the holdings of different customers.
If someone comes by and tries to buy that million dollar share, the brokerage is merely required to honor the trade with a share they have from anywhere, including one purchased from the market or held by a different customer.
Again, this whole notion of "Hold the Line" is just not how trading works.
[1] I mean, that's just trivially violated by a perfectly normal short sale by definition.
There were instructions going all around WSB with "put in a limit sell order at $10000000 to prevent them from loaning your shares" as well as directions on how to go into your trading account and disable "stock yield enhancement" or whatever it's called on the platform.
(And I hate that I'm in the position of defending WSB, a group of degenerate gamblers dragging in new victims every day. But it just so happens that they were on top of this one particular angle.)