Trading Gurus on Twitter/Youtube/Discord/Stocktwits... legal aspect

Discussion in 'Educational Resources' started by JamesJ, Feb 9, 2021.

  1. JamesJ

    JamesJ

    Lately more and more mentors/gurus emerged on youtube and other channels posting opinions/videos/recommendations...

    I am pretty sure the SEC is keeping a close look at them.
    As i am following some myself and now and then get a trading idea, i'd like to get your opinion on some legal aspects of that. Some cases surely cannot be decided easy, but i hope you seasoned traders can share your view on it. I share my view below each example.

    Example 1:

    Widely followed trader shares his view on twitter (e.g. Will Meade):
    Generally ok as long as no insider information is used, recommending stocks with high short ratio to squeeze is borderline and might be viewed as market manipulation imo.

    Example 2:

    Stock Trader aka Guru shares his picks on Youtube (e.g. the travelling trader):

    Generally ok as long as no insider information and no false claims to push. Presenting public available information and own conclusions is ok. Guru has to disclaim own holdings and possible other interests such as paid posts.

    Example 3:

    Guru gives early access of his future picks / videos for paying subscribers (e.g. using Discord or private website):
    - From the viewpoint of the Guru: Ok, if rules as in Ex. 2 are followed.
    - From the view of subscriber: Gurus early access pick is public information, possible buying in anticipation of more buyers coming when youtube video is online, is fine.
    (I'm not 100% sure on this, but it's comparable to an investment bank giving their rating changes to institutional investors before they go out to the public.).

    Example 4:

    Guru has a private chatgroup in which they discuss which stocks to buy and then pump using posts on forums and youtube and so on, knowingly making the stock look much better than it is.

    Highly illegal, there was a SEC rule on an individual investor pumping his Covid related stock knowingly using wrong information.


    Maybe you have other (borderline) examples.
     
  2. Why is someone showing stocks with high short sell ratio borderline market manipulating? I don't agree. What is your rational for such claim?

     
  3. JamesJ

    JamesJ

    I think if someone with many followers would post something like:

    "Look at stock XY, let's all buy this and squeeze the shorts out"

    I would consider this market manipulation.
     
  4. That is different from posting a list of stocks with high short sell ratios.

    And I disagree with your statement also. Here is how the sec defines market manipulation. It's not an artificial price when real supply and demand determines the price.

    "The US Securities Exchange Act defines market manipulation as "transactions which create an artificial price or maintain an artificial price for a tradable security". ..."

     
    JamesJ likes this.
  5. qlai

    qlai

    Do you have a link?
     
  6. newwurldmn

    newwurldmn

    It’s all good unless they have a CFA. Then they are foooked according to @Butterfly.
     
    destriero likes this.
  7. destriero

    destriero


    CFA = boss level arbitrageur.
     
  8. JamesJ

    JamesJ

    qlai likes this.