I Ain’t Hear No Bell

Reading Time: 5 minutes

author u/atobitt

TL;DR – Hedgies are up to the same ol’ same ol’ bullsh*t. Here’s some FINRA literature to keep you entertained while waiting for lift off.

____________________________________________________________________________________________________________

WHAT THE F*CK IS UP, APES!?

Once again, I’ve been dabblin’ in the data. Even after months of this sh*t, I’m still pleasantly surprised when I find more fecal matter which further confirms my rock-hard bias. In fact, there’s only one thing that jacks-my-atobitts even more than being right…

…and that’s jacking-the-atobitts of all the apes within this community.

What can I say? I’m a selfless dude.

*sets chip on shoulder*

____________________________________________________________________________________________________________

Now then, I want you to toss those double FUDge brownies you’ve been snacking on and start power-chugging this DD smoothie. I know there are only about 17 of you out there that will actually read this thing word-for-word so I won’t even bother asking you to read the 40 page prequel of HOC I , II , III.

For those of you that DID read the HOC series, you may remember I talked about the delayed reporting that FINRA has when it comes to reporting misconduct among the hedgef*cks. Here’s a wee quote from the HOC II:

r/Superstonk - I Ain't Hear No Bell

____________________________________________________________________________________________________________

Now, I’m pretty damn sure I beat this horse into the ground, but just to make sure, I’ll say it once again….

FINRA is very inconsistent when it comes to timely filings. Issues can be brought to their attention YEARS before they issue fines, or they can be fined within the same month & year in which the violation occurred. But hey, that’s FINRA…

Long story short, I still use https://brokercheck.finra.org/ to check the records on most of the DTC’s participants. I literally do this for a few minutes each day to see if Citadel & friends have any more violations for misquoting the bid/ask prices on their exchange, or if Goldman Sachs is still smashing that F3 key to activate their auto-locate feature (where my HOC III fans at?).

Needless to say, I found more fecal matter.

I ain’t hear no bell

____________________________________________________________________________________________________________

CHAPTER 1: CAPITAL REQUIREMENTS

Let’s start off with a lil’ finger bang..

We’ve all read the recent rule changes from the DTC regarding daily monitoring of participant activity. This was detailed extensively in SR-DTC-2021-003. Keep in mind, Dr. T stated this was just a formality because the DTC has been monitoring participant activity daily for quite some time. However, I’m now seeing more frequent violations for failing to properly maintain sufficient capital within customer accounts. Historically, these are pretty infrequent citations so I can’t help but think some of the new rule changes may be having an effect.

You’ve gotta look closely to see what’s happening…

Take a look at Wells Fargo…

r/Superstonk - I Ain't Hear No Bell
https://files.brokercheck.finra.org/firm/firm_126292.pdf

On 6/11/2021, FINRA resolved Wells Fargo’s fine for violating CME Rule 971 A.1 which relates to the funds set aside within a customer’s account (particularly with swaps/futures).

r/Superstonk - I Ain't Hear No Bell
https://www.cmegroup.com/content/dam/cmegroup/rulebook/NYMEX/1/9.pdf

____________________________________________________________________________________________________________

I probably wouldn’t think anything about this if it were the only violation I stumbled upon…. but what’s interesting is that Bank of America got slapped with the same f*cking violation on the same f*cking date… 6/11/2021…

r/Superstonk - I Ain't Hear No Bell
https://files.brokercheck.finra.org/firm/firm_283942.pdf

I started looking into the docket number for this case and noticed it was within the same sequence as the citation for Wells Fargo..

Bank of America docket # CBOT 21-CH-2102….

Wells Fargo docket # CBOT 21-CH-2105….

So… why not? I pulled a quick google search for CBOT 21-CH-2101

BOOM. Citigroup.

r/Superstonk - I Ain't Hear No Bell
https://www.cmegroup.com/notices/clearing/2021/03/21-CH-2101.html

CME 970A is another requirement for minimum capital:

r/Superstonk - I Ain't Hear No Bell
https://www.cmegroup.com/content/dam/cmegroup/rulebook/NYMEX/1/9.pdf

____________________________________________________________________________________________________________

How deep does this rabbit hole go?

Citigroup | docket # CBOT 21-CH-2101…. 3/19/2021

Bank of America | docket # CBOT 21-CH-2102…. 6/11/2021

ADM Investor Services, INC | docket # CBOT 21-CH-2103…. 6/11/2021

Mizuho Securities | docket # CBOT 21-CH-2104…. 6/11/2021

Wells Fargo | docket # CBOT 21-CH-2105…. 6/11/2021

ABN Amro Clearing | docket # CBOT 21-CH-2106…. 6/11/2021

Phillip Capital, INC | docket # CBOT 21-CH-2107…. 6/11/2021

Santander Investment Securities, INC | docket # CBOT 21-CH-2108…. 6/11/2021

8 citations issued in 2021 and 7 of them occurred during June. By changing 21-CH to 20-CH and then following the same pattern, I was able to look backwards through 2017 (filing gets weird w/ dates prior to that). Here’s what I found:

Citations for Underfunded Capital by year:

2017: 7 citations (full year)

2018: 8 citations (full year)

2019: 7 citations (full year)

2020: 13 citations (full year)

2021: 8 citations (half year)

Sometimes there will be a citation that’s listed as 19-CH-1908, but actually filed in January 2020. Most of them are split randomly throughout the year, but some are done in chunks (typically June / August). This leads me to believe the actual date of occurrence happens within 4 – 6 weeks of the citation being filed. I could be wrong, but the filings appear to be done this way.

Therefore, we can start to deduce what the actual f*ck is happening here. From 2017 through 2019, the average annual citation is between 7 and 8. Suddenly, we’ve jumped almost 100% during 2020 and 2021 is currently on track to surpass it. Either FINRA is getting much better at identifying underfunded capital accounts, or the number of underfunded capital accounts is increasing. Obviously, we need to rule out that a bunch of new entities haven’t been added to FINRA’s “audit list”, but the citations seem to generally reference the same folks.

All aboard the struggle bus.

____________________________________________________________________________________________________________

CHAPTER 2: SHORT SALES

I had the pleasure of reading one of the most f*cked up short sale violations this past week. Typically, FINRA will break short sale violations into different buckets. If you mark a sale as long when it was short, that’s a specific violation. Likewise, if you fail to locate a borrow, that’s another violation. However, FINRA issued a citation on 5/24/2021 to Wolverine Execution Services for one of the most blatantly obvious f*ck-ups I’ve ever read. This actually occurred for 3 F*CKING YEARS between May 2016 and March 2019…. Once again, good job FINRA on the timely filings. Check it out:

r/Superstonk - I Ain't Hear No Bell
https://files.brokercheck.finra.org/firm/firm_120719.pdf

LOL

No sh*t… you can’t make this up….

So let me get this straight….. for 3 years, Wolverine:

  1. “inaccurately” marked nearly 19,000 transactions as long instead of short.. not accidentally– INACCURATELY…
  2. sold shares they didn’t have…
  3. didn’t have the paperwork for almost 560,000 locate requirements…
  4. failed to meet the reporting obligations for order data within the audit trail system on 40% of sampled trades….
  5. AND failed to provide proper order event information in 19% of their sampled trades…

Did I already say LOL ?

But wait… it gets better…. The VERY NEXT violation is literally the same as this one, but with new numbers and new bed-time stories:

r/Superstonk - I Ain't Hear No Bell
r/Superstonk - I Ain't Hear No Bell

LOLLOLLOLLOL

Yeah, you read that right…. Wolverine relied on their clients to provide proof of borrowing before letting them perform a short sale. If they didn’t upload the proper documentation, the sale wouldn’t occur.

“No one ever said we had to KEEP that paperwork, though….”

…f*cking dipsh*ts….

DIAMOND.F*CKING.HANDS

Published
Categorized as gme

Feel free to comment on this (be decent, no spam, fud and shills)