This is a very exciting opportunity to talk to a veteran investment advisor, Rich Gates, who runs TFS Capital LLC and Elmagin Capital LLC. Rich had figured as one of the agitators in Flash Boys, Michael Lewis’ exposé of high-speed trading.
More recently, he has also experienced first hand the risks of short-selling even when the shorts were right. We contacted him for advice after our short positions on LongFin were halted, and he has been warmly empathetic and has agreed to do an AMA (Ask Me Anything) on 8PM EST, Sunday on /r/investing crosspost to /r/longfinoptions.
Please be prepared to ask him about 1) his personal battles with short-selling U.S.-listed companies that later turned out to be frauds 2) issues with the inadequate market structure that is causing this problem 3) valuable role of short-selling in general and 4) specific actions that we can take to try to help protect future investors. One item he would like to address is the role of DTCC in this complicated quagmire. Please read the letter he sent to DTCC that addresses changes he'd like to see the industry make: https://assets.bwbx.io/documents/users/iqjWHBFdfxIU/rm8V5.aZ5Bpo/v0
Barron's excerpt:
"Gates’ funds shorted some of the U.S.-listed Chinese companies that later turned out to be frauds. The stocks crashed, but even so, the short sellers lost money. That’s because they couldn’t close out their positions in the halted stocks, and therefore had to continue posting margin security and pay to borrow the shares—for months, sometimes for years. As we reported at the time, these investors who had uncovered many of the frauds and made the correct bet, ended up owing millions to their own prime brokers’ stock-loan departments. For whatever reason, the brokers seemed in no hurry to fix the problem."
Recent articles about the Rich Gates exposing scam Chinese companies:
https://www.barrons.com/articles/getting-caught-short-1523065469
https://www.bloomberg.com/view/articles/2018-04-11/-go-to-zero-isn-t-great-for-short-sellers
https://www.bloomberg.com/view/articles/2018-04-20/being-short-and-right-can-be-bad (we were featured here today, April 20).
Disclaimer: Rich assumes no responsibility for the accuracy nor completeness of the information he provides. He is neither receiving any compensation nor business relationship with any company or with the people who he has talked to here. He is just trying to be nice. Rich and his funds hold no positions in $LFIN. Please consult with a registered investment advisor, broker or someone other than Rich before making any investment decision.
Submitted April 21, 2018 at 12:40PM by soundofreedom https://ift.tt/2vzcmIj
