Sources told FOX Business’s Charlie Gasparino that it would be difficult for the SEC to file a lawsuit, as most Reddit touts were anonymous.
The guy who created Reddit’s WallStreetBets is not who you think he is.
He is 39 years old. He lives in Mexico City with his wife, a doctor, and spends his weeks behind their 3-year-old twins, taking care of his day job as a consultant – hardly the kind of character one might associate with the bubbling investment forum.
He never thought that the Reddit community he created in 2012 would turn into a force that would be so powerful that it would put GameStop Corp’s shares in excess, almost overthrow a hedge fund and professional money managers would stare across the country Twitter with their mouths folded.
| Ticker | Safety | Last | Alter | Alter% |
|---|---|---|---|---|
| GME | GAMESTOP CORP | 193.60 | -153.91 | -44.29% |
“It’s a bit like watching one of the horror movies where you can see the bad guy going up stairs,” Jaime Rogozinski said. “You see this train wreck happening in real time.”
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Mr. Rogozinski started WallStreetBets when he worked as an information technology consultant for the Inter-American Development Bank in Washington, DC. He was single at the time and earned a decent living and was looking for something to put money into. The only problem was the conventional wisdom of sticking with the index tracking funds.
“I would go to different forums and ask them, ‘Hey, what do you think of XYZ? “And mostly the sentiment is’ It’s too risky, don’t try to pick stocks, you’ll never win, ” he said.
The sober advice did not cut him in online communities like Bogleheads. The comments of investment bank analysts on cable TV have also not been determined such as the net present value, cash flow and price-to-earnings ratio. He decided to create a hub for the reddit operator Reddit where like-minded people could come together to discuss exclusively the type of trade that would make a financial adviser’s skin crawl. Their approach is more similar to gambling than spreadsheet analysis, and their motto is something along the lines of ‘YOLO’, short ‘you only live once’.
In the first few years, the group numbered only a few thousand subscribers – including former pharmaceutical executive Martin Shkreli, who briefly served as moderator before being convicted of security fraud. (WallStreetBets’ Twitter account wished him well with his sentencing in March 2018.)
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Everything changed in 2019. Brokerage giants Fidelity Investments and Charles Schwab Corp have eliminated trading commissions. Interest in retail has increased and the number of WallStreetBets subscribers has quickly crossed 500,000 – then one million during the March 2020 market sale and 2 million during the now infamous campaign to raise GameStop shares higher.
WallStreetBets users have been at the forefront of betting on everything from cruise line operators hit by the pandemic to Lumber Liquidators Holdings Inc., the company has been embroiled in a scandal following reports that the floor was fitted with excessive amounts of formaldehyde. And they did so unashamedly, celebrating both their victories and their losses with devotion. (The community described the posting of screenshots of the latter, which regularly receives thousands of calls, as ‘loss porn’.)
‘Many other places that discuss trade are really pretentious. At WallStreetBets, it’s both: ‘Look at my money!’ but also ‘Look at all this money I lost’, and I think that’s what refreshes people, ‘said Mr. Rogozinski said.
At best, WallStreetBets has shown that trading does not have to be exclusively a Patagonia-based man. It was part of the emerging movement to democratize the investment world by breaking down barriers to entry, even if some people would be stumbled along by cruel losses. Many years ago, Mr. Rogozinski that he had to call Wachovia and pay a commission of $ 30 or more to buy Google Inc. shares. Anyone with a phone or an internet connection can trade within minutes – and show their skills or lack thereof to thousands of other people.
“A massive group of people have arranged where they sit together at the poker table, which was previously only invited,” said Mr. Rogozinski said. “You can no longer ignore them.”
If we look past the chatter and Jerome Powell memes, it becomes for Mr. Rogozinski made it clear that the WallStreetBets community has a bad belly – a side he has increasingly struggled to reckon with.
First, there were the possible legal issues. As WallStreetBets grew, it faced accusations – often made by vicious short sellers – of market manipulation. Moderators urged users not to post ‘for the purpose of inciting or coordinating a group effort to move the security market.’ But that did not silence the critics of the community.
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Then there was the hate speech. Last year, Mr. Rogozinski decides to do some housekeeping and scrub some of the more distasteful content shared in the community. In an outside Reddit chat room associated with WallStreetBets, he found language with obscenity, racism and antigay views that prevail moderators.
“There were a handful of mods who were white supremacists,” he said. As a Jewish man married to a Mexican woman, he found it impossible to get a belly.
“I have very thick skin and people can tell me what they want, but at some point there is a moral point of view – as with my children, I do not want them to think, ‘Well, they can over. tell you what they want. , ‘”he said.
Mr. Rogozinski removed the private chat room hosted on Discord where the offensive messages were exchanged. He also removed some of the moderators. The setback was quick: enough users talked about his actions – along with promoting a book based on WallStreetBets, as well as an esports game under the WallStreetBets name – that he was started by other moderators. He has not moderated the community since April.
However, it was impossible for him to escape his legacy. Just last week, he received a call from Andrew Left, founder of Citron Research. The short seller, who bet against GameStop in public, told Mr. Rogozinski begged for help. He said he was attacked online by hordes of angry investors, some of whom even targeted his children.
A Reddit spokesman said the company prohibits users from posting or soliciting illegal transactions, forcing others and threatening them with violence. She added that the company “will cooperate with valid law enforcement investigations or actions as necessary.”
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Mr. Rogozinski, who can not do much from the sidelines, was hurt by the call from Mr. Left.
When big investors like Carl Icahn and Bill Ackman end up in a public spearhead, it’s like watching a heavyweight boxing match, ‘he said. But if an online mob goes after the children or spouse of an investor – it crosses the line, he said.
“It was no longer what it used to be,” he said.