Genius, just genius.... Hint: he would get 100% profits then.... By the way I thought most brokers don't let you short penny stocks, for exactly this reason....
Yeah, I would wait for the broker to sue. By the way, if this is true, he was not short the entire account, he was short about 8000 shares, or $16k before Shkreli made his move. So he was short just $16000 in a $37000 account.
Looking at the graph, it is not E*Trade's fault. The price gapped up and opened at $14 due to a 50% takeover. And indeed, I do see that there is short interest.
I imagine that a lot more people were in a similar position on 8/24/2015. Some ETFs like IVV or stocks like GE were off -30% -- this is supposedly safe large cap bets, and no trades were busted. If they were on 4x margin and autoliquidated, I imagine there would be negative balance too. I would love to hear what happened just to educate us...I imagine IB would sue the customer, and then with the judgement put and lien on houses, wages, and stuff?
otherwise, just look at who the original poster is. A well known democrat hack trying to stir up anymosity against Wall Street. Unfortunately for him, he will find very little sympathy on this site. But I think we all need more clear rules written so non lawyers can understand what exactly are the auto liquidation policies of the broker.
The broker can not auto-liquidate until there is a open market to execute orders on. Which then it's already to late as the first execution was at $11 from $2 previous day. Things like this where retail traders get squezed happen all the time. There is always some small-cap company that gaps up big due to some news event, and some sucker is short it.
This is just wrong in so many ways. The guy shorts a biotech with a tiny float. Biotechs are known to have huge % moves . Anyone who trades them has to know they are by far the most volatile stocks out here. He shorts a 2.00 stock. Why bother? The news about them going under has been in the stock for a while. Risk reward in shorting a 2.00 stock is horrible. Especially some thin biotech. This guy, while probably a nice guy, really has no idea how equity trading works. He is blaming Etrade??? The news came out after the close. A lot of retail brokers don't monitor after hours trading. Also since when is it up to the broker to babysit a trader? But the worst part is that he is actually out there asking the public to bail him out on a stock trade? Really? What about the guys who got obliterated in SHPG last year over night ? Should they all have go fund pages? How about the guys who bought ES pre-open on Aug 24th and had their accounts clobbered that morning? Let's set up some go fund pages for them. I'm sorry for the guy but this is absolutely ridiculous. Etrade should go after him for all of the money. Not a dime less. Otherwise it sets a real bad precedent.