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#637571 - 21/03/21 02:34 AM Naked Short Selling The Truth Is Worse Than What's Been Told
Pickles Offline
1st Team Squad

Registered: 23/12/15
Posts: 5212
Naked Short Selling: The Truth Is Much Worse Than You Have Been Told

There is a massive threat to our capital markets, the free market in general, and fair dealings overall. And no, it’s not China. It’s a homegrown threat that everyone has been afraid to talk about.

Until now.

That fear has now turned into rage.

Hordes of new retail investors are banding together to take on Wall Street. They are not willing to sit back and watch naked short sellers, funded by big banks, manipulate stocks, harm companies, and fleece shareholders.

The battle that launched this week over GameStop between retail investors and Wall Street-backed naked short sellers is the beginning of a war that could change everything.

It’s a global problem, but it poses the greatest threat to Canadian capital markets, where naked short selling—the process of selling shares you don’t own, thereby creating counterfeit or ‘phantom’ shares—survives and remains under the regulatory radar because Broker-Dealers do not have to report failing trades until they exceed 10 days.

This is an egregious act against capital markets, and it’s caused billions of dollars in damage.

Make no mistake about the enormity of this threat: Both foreign and domestic schemers have attacked Canada in an effort to bring down the stock prices of its publicly listed companies.

In Canada alone, hundreds of billions of dollars have been vaporized from pension funds and regular, everyday Canadians because of this, according to Texas-based lawyer James W. Christian. Christian and his firm Christian Smith & Jewell LLP are heavy hitters in litigation related to stock manipulation and have prosecuted over 20 cases involving naked short selling and spoofing in the last 20 years.

“Hundreds of billions have been stolen from everyday Canadians and Americans and pension funds alike, and this has jeopardized the integrity of Canada’s capital markets and the integral process of capital creation for entrepreneurs and job creation for the economy,” Christian told Oilprice.com.

The Dangerous Naked Short-Selling MO

In order to [legally] sell a stock short, traders must first locate and secure a borrow against the shares they intend to sell. A broker who enters such a trade must have assurance that his client will make settlement.

While “long” sales mean the seller owns the stock, short sales can be either “covered” or “naked”. A covered short means that the short seller has already “borrowed” or has located or arranged to borrow the shares when the short sale is made. Whereas, a naked short means the short seller is selling shares it doesn’t own and has made no arrangements to buy. The seller cannot cover or “settle” in this instance, which means they are selling “ghost” or “phantom” shares that simply do not exist without their action.

When you have the ability to sell an unlimited number of non-existent phantom shares in a publicly-traded company, you then have the power to destroy and manipulate the share price at your own will.

And big banks and financial institutions are turning a blind eye to some of the accounts that routinely participate in these illegal transactions because of the large fees they collect from them. These institutions are actively facilitating the destruction of shareholder value in return for short term windfalls in the form of trading fees. They are a major part of the problem and are complicit in aiding these accounts to create counterfeit shares.

The funds behind this are hyper sophisticated and know all the rules and tricks needed to exploit the regulators to buy themselves time to cover their short positions. According to multiple accounts from traders, lawyers, and businesses who have become victims of the worst of the worst in this game, short-sellers sometimes manage to stay naked for months on end, in clear violation of even the most relaxed securities laws.

The short-sellers and funds who participate in this manipulation almost always finance undisclosed “short reports” which they research & prepare in advance, before paying well-known short-selling groups to publish and market their reports (often without any form of disclosure) to broad audiences in order to further push the stock down artificially. There’s no doubt that these reports are intended to create maximum fear amongst retail investors and to push them to sell their shares as quickly as possible.

That is market manipulation. Plain and simple.

Their MO is to short weak, vulnerable companies by putting out negative reports that drive down their share price as much as possible. This ensures that the shorted company in question no longer has the ability to obtain financing, putting them at the mercy of the same funds that were just shorting them. After cratering the shorted company's share price, the funds then start offering these companies financing usually through convertibles with a warrant attachment as a hedge (or potential future cover) against their short; and the companies take the offers because they have no choice left. Rinse and Repeat.

In addition to the foregoing madness, brokers are often complicit in these sorts of crimes through their booking of client shares as “long” when they are in fact “short”. This is where the practice moves from a regulatory gray area to conduct worthy of prison time.

Naked short selling was officially labeled illegal in the U.S. and Europe after the 2008/2009 financial crisis.

Making it illegal didn’t stop it from happening, however, because some of the more creative traders have discovered convenient gaps between paper and electronic trading systems, and they have taken advantage of those gaps to short stocks.

Still, it gets even more sinister.

According to Christian, “global working groups” coordinate their attacks on specifically targeted companies in a “Mafia-like” strategy.

Journalists are paid off, along with social media influencers and third-party research houses that are funded by what amounts to a conspiracy. Together, they collaborate to spread lies and negative narratives to destroy a stock.

At its most illegal, there is an insider-trading element that should enrage regulators. The MO is to infiltrate a company through disgruntled insiders or lawyers close to the company. These sources are used to obtain insider information that is then leaked to damage the company.

Often, these illegal transactions involve paying off “informants”, journalists, influencers, and “researchers” are difficult to trace because they are made from offshore accounts that are shut down once the deed is done.

Likewise, the “shorts” disguised as longs can be difficult to trace when the perpetrators have direct market access to trading systems. These trades are usually undetected until the trades fail or miss settlement. At that point, the account will move the position to another broker-dealer and start the process all over again.

The collusion widens when brokers and financial institutions become complicit in purposefully mislabeling “shorts” as “longs”, sweeping the illegal transactions under the rug and off of regulatory radar.

“Spoofing” and “layering” have also become pervasive techniques to avoid regulator attention. Spoofing, as the name suggests, involves short sellers creating fake selling pressure on their targeted stocks to drive prices lower. They accomplish this by submitting fake offerings in “layers” at different prices to create a mirage.

Finally, these bad actors manage to skirt the settlement system, which is supposed to “clear” on what is called a T+2 basis. That means that any failed trades must be bought or dealt with within 3 days. In other words, if you buy on Monday (your “T” or transaction day), it has to be settled by Wednesday.

Unfortunately, Canadian regulators have a hard time keeping up with this system, and failed trades are often left outstanding for much longer periods than T+2. These failing trades are constantly being traded to reset the settlement clock and move the failing trade to the back of the line. The failures of a centralized system…

According to Christian, it can be T+12 days before a failed trade is even brought to the attention of the IIROC (the Investment Industry Regulatory Organization of Canada)…

Prime Brokers and Banks are Complicit

This is one of Wall Street’s biggest profit center and fines levied against them are merely a minor cost of doing business.

Some banks are getting rich off of these naked short sellers. The profits off this kind of lending are tantalizing, indeed. Brokers are lending stocks they don’t own for massive profit and sizable bonuses.

This layer of what many have now called a “criminal organization” is the toughest for regulators to deal with, regardless of the illegal nature of these activities.

Prime brokers lend cash account shares that are absolutely not allowed to be lent. They lend them to short-sellers in order to facilitate them in settling their naked shorts.

It’s not that the regulators are in the dark on this. They are, in fact, handing out fines, left and right—both for illegal lending and for mismarking “shorts” and “longs” to evade regulatory scrutiny. The problem is that these fines pale in comparison to the profits earned through these activities.

And banks in Canada in particular are basically writing the rules themselves, recently making it easier (and legal) to lend out cash account shares.

Nor do law firms have clean hands. They help short sellers bankrupt targeted companies through court proceedings, a process that eventually leads to the disappearance of evidence of naked shorts on the bank books.

“How much has been stolen through this fraudulent system globally is anyone’s guess,” says Christian, “but the number begins with a ‘T’ (trillions).”

The list of fines for enabling and engaging in manipulative activity that destroys companies’ stock prices may seem to carry big numbers from the retail investor’s perspective, but they are not even close to being significant enough to deter such actions:

- The SEC charged Citigroup’s principal U.S. broker-deal subsidiary in 2011 with misleading investors about a $1 billion collateralized debt obligation (CDO) tied to the U.S. housing market. Citigroup had bet against investors as the housing market showed signs of distress. The CDO defaulted only months later, causing severe losses for investors and a profit of $160 million (just in fees and trading profits). Citigroup paid $285 million to settle these SEC charges.

- In 2016, Goldman, Sachs & Co. agreed to pay $15 million to settle SEC charges that its securities lending practices violated federal regulations. To wit: The SEC found that Goldman Sachs was mismarking logs and allowed customers to engage in short selling without determining whether the securities could reasonably be borrowed at settlement.

- In 2013, a Charles Schwab subsidiary was found liable by the SEC for a naked short-selling scheme and fined $8.2 million.

- The SEC charged two Merrill Lynch entities in 2015 with using “inaccurate data in the course of executing short sale orders”, fining them $11 million.

- And most recently, Canadian Cormark Securities Inc and two others came under the SEC’s radar. On December 21, SEC instituted cease-and-desist orders against Cormark. It also settled charges against Cormark and two other Canada-based broker deals for “providing incorrect order-making information that caused an executing broker’s repeated violations of Regulation SHO”. According to the SEC, Cormark and ITG Canada caused more than 200 sale orders from a single hedge fund, to the tune of more than $660 million between August 2016 and October 2017, to be mismarked as “long” when they were, in fact, “short”—a clear violation of Regulation SHO. Cormark agreed to pay a penalty of $800,000, while ITG Canada—one of the other broker-dealers charged—agreed to pay a penalty of $200,000. Charging and fining Cormark is only the tip of the iceberg. The real question is on whose behalf was Cormark making the naked short sells?

- In August 2020, Bank of Nova Scotia (Scotiabank) was fined $127 million over civil and criminal allegations in connection with its role in a massive price-manipulation scheme.

According to one Toronto-based Canadian trader who spoke to Oilprice.com on condition of anonymity, “traders are the gatekeeper for the capital markets and they’re not doing a very good job because it’s lucrative to turn a blind eye.” This game is set to end in the near future, and it is only a matter of time.

“These traders are breaking a variety of regulations, and they are taking this risk on because of the size of the account,” he said. “They have a responsibility to turn these trades down. Whoever is doing this is breaking regulations [for the short seller] and they know he is not going to be able to make a settlement. As a gatekeeper, it is their regulatory responsibility to turn these trades away. Instead, they are breaking the law willfully and with full knowledge of what they are doing.”

“If you control the settlement system, you can do whatever you want,” the source said. “The compliance officers have no teeth because the banks are making big money. They over-lend the stocks; they lend from cash account shares to cover some of these fails … for instance, if there are 20 million shares they sold ‘long’, they can cover by borrowing from cash account shares.”

The Naked Truth

In what he calls our “ominous financial reality”, Tom C.W. Lin, attorney at law, details how “millions of dollars can vanish in seconds, rogue actors can halt trading of billion-dollar companies, and trillion-dollar financial markets can be distorted with a simple click or a few lines of code”.

Every investor and every institution is at risk, writes Lin.

The naked truth is this: Investors stand no chance in the face of naked short sellers. It’s a game rigged in the favor of a sophisticated short cartel and Wall Street giants.

Now, with online trading making it easier to democratize trading, there are calls for regulators to make moves against these bad actors to ensure that North America’s capital markets remain protected, and retail investors are treated fairly.

The recent GameStop saga is retail fighting back against the shorting powers, and it's a wonderful thing to see - but is it a futile punch or the start of something bigger? The positive take away from the events the past week is that the term “short selling” has been introduced to the public and will surely gather more scrutiny.

Washington is gearing up to get involved. That means that we can expect the full power of Washington, not just the regulators, to be thrown behind protecting the retail investors from insidious short sellers and the bankers and prime brokers who are profiting beyond belief from these manipulative schemes.

The pressure is mounting in Canada, too, where laxer rules have been a huge boon for manipulators. The US short cartel has preyed upon the Canadian markets for decades as they know the regulators rarely take action. It is truly the wild west.

Just over a year ago, McMillan published a lengthy report on the issue from the Canadian perspective, concluding that there are significant weaknesses in the regulatory regime.

While covered short-selling itself has undeniable benefits in providing liquidity and facilitating price discovery, and while the Canadian regulators’ hands-off approach has attracted many people to its capital markets, there are significant weaknesses that threaten to bring the whole house of cards down.

McMillan also noted that “the number of short campaigns in Canada is utterly disproportionate to the size of our capital markets when compared to the United States, the European Union, and Australia”.

Taking Wall Street’s side in this battle, Bloomberg notes that Wall Street has survived “numerous other attacks” over the centuries, “but the GameStop uprising could mark the end of an era for the public short”, suggesting that these actors are “long-vilified folks who try to root out corporate wrongdoing”.

Bloomberg even attempts to victimize Andrew Left’s Citron Research, which—amid all the chaos—has just announced that it has exited the short-selling game after two decades.

Nothing could be further from the truth. Short sellers, particularly the naked variety, are not helping police the markets and route out bad companies, as Bloomberg suggests. Naked short sellers are not motivated by moral and ethical reasons, but by profit alone. They attack good, but weak and vulnerable companies. They are not the saviors of capital markets, but the destroyers. Andrew Left may be a “casualty”, but he is not a victim. Nor likely are the hedge funds with whom he has been working.

In a petition initiated by Change.org, the petitioners urge the SEC and FINRA to investigate Left and Citron Research, noting: “While information Citron Research publishes are carefully selected and distributed in ways that do not break the law at first sight, the SEC and FINRA have overlooked the fact that Left and Citron gains are a result of distributing catalysts in an anticipation of substantial price changes due to public response in either panic, encouragement, or simply a catalyst action wave ride. Their job as a company is to create the most amount of panic shortly after taking a trading position so they and their clients can make the most amount of financial gains at the expense of regular investors.”

On January 25th, the Capital Markets Modernization Taskforce published its final report for Ontario’s Minister of Finance, noting that while naked short selling has been illegal in the United States since 2008, it remains a legal loophole in Canada. The task force is recommending that the Ministry ban this practice that allows for the short-selling of tradable assets without first borrowing the security.

The National Coalition Against Naked Short Selling - Failing to Deliver Securities (NCANS), which takes pains to emphasize that is not in any way against short-selling, notes: “Naked short-selling transfers the risk exposure and the hedging expense of the derivatives market makers onto the backs of equity investors, without any corresponding benefit to them. This is fundamentally unfair, and must stop.”

Across North America, the issue is about to reach a fever pitch over GameStop. For once, regular retail investors have a voice to use against Wall Street. And for once, Washington appears to be listening. The House and Senate both have hearings scheduled over the GameStop saga.

Paradoxically, the same company that basically started the retail investor coup—zero-fee trading app Robinhood—is now under fire for pulling the rug out from under the same democratic movement.

After retail investors joined forces against Wall Street short-sellers to push GameStop stock from $20 to a high of over $480 in less than a week, Robinhood made the very unpopular move of instituting a ban on buying for retail investors. Under the rules, Wall Street could still buy and sell, but retail investors could only sell. This new band of investors—which includes pretty much all of Robinhood’s clientele—are up in arms, with customers now suing. They won’t go away, and they have Washington’s ear … and Twitter and Reddit’s social media power. This is shaping up to be an uprising.

What happens with GameStop next could end up dictating a new form of capital markets democracy that levels the playing field and punishes the Mafia-like elements of Wall Street that have been fleecing investors and destroying companies for years.

Retail investors want to clean up capital markets, and they just might be powerful enough to do it now. That’s a serious wake-up call for both naked short sellers and the investing public.

Viva la Revolucion.

James Stafford

Publisher Oilprice.com

https://www.reddit.com/r/GME/comments/m9bfp0/naked_short_selling_the_truth_is_much_worse_than/

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#637572 - 21/03/21 02:46 AM Re: Naked Short Selling The Truth Is Worse Than What's Been Told [Re: Pickles]
Pickles Offline
1st Team Squad

Registered: 23/12/15
Posts: 5212
2008 should have been the END to the greed and manipulation but it "ONLY" made these Folks even more emboldened. They work in a system that is so heavily manipulated in their favour and fines are treated as a running cost of doing business and not as what it should be a deterrent.

They have ruined ordinary Folks lives for decades...millions of job losses with decent Companies being bankrupted. Pittance of pensions for Folks who thought they'd be able to retire after working hard all their lives, having to carry on working because their pension doesn't cover much of anything to survive off.

BUT HOPEFULLY, ALL THIS IS ABOUT TO CHANGE

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#637573 - 21/03/21 03:39 AM Re: Naked Short Selling The Truth Is Worse Than What's Been Told [Re: Pickles]
Pickles Offline
1st Team Squad

Registered: 23/12/15
Posts: 5212
Gamestop is so much more than just a minor blip or an oddity in an otherwise "supposedly" regulated system. This has gone Worldwide...shareholders from all 4 corners of the World know what is going on...the travesty here is that the World's media are otherwise silent on the truth...they are controlled by the very folks who have got away with this huge FRAUD for so long.

This is a gamechanger, this an opponent who has been Champion for so long...Mike Tyson in his prime, fighting Mr.Bean.
However Mike Tyson has broken every bone in his arms and hands and is exhausted, standing unable to throw a punch. Eventually even the GREAT Tyson will eventually fall and will be unable to get up and Mr.Bean will have won! Tyson will never recover from this...ok, ok maybe this is a poor comparison but I'm trying to put across here the level of difference this is going to make!

I know there are folks out there who have a genuine interest in this and feel they have very little knowledge of how all this works...you don't really need to. Folks who have bought shares of GameStop (Retail) have been on this rollercoaster for awhile now and the one redeeming factor in all of this is that with unity and with more than enough collection of information, we have come to understand that we just keep buying and holding when the Hedgefunds keep trying to tank the stock price. Nobody on a significant scale on retails side has sold their shares...it's been reputed that alone Retail now owns at least 100% of the Float, which means the Hedgefunds will eventually have to try and recover their positions at the price retail determines.

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#637574 - 21/03/21 03:42 AM Re: Naked Short Selling The Truth Is Worse Than What's Been Told [Re: Pickles]
Pickles Offline
1st Team Squad

Registered: 23/12/15
Posts: 5212
Gamestop is currently $200.27 per share...sounds high however I do believe that $1k per share is a stop on the way to going onto the highest ever price for a share ever recorded in history. Now this is my belief and I'm not touting this as financial advice because I am not a financial advisor...the information is out there if folks choose to find it.

Tuesday 23rd March 2021 is probably the biggest catalyst for this shares rocket's engines to start.

Q4 Earnings report is due and expected to be bullish, along with the news about Gamestop's future as a Business.
The Former CEO and co-Founder of Chewy.com - Ryan Cohen bought 9 million shares of Gamestop and has the biggest controlling percentage of shares and thus is now a Board Member. He has brought on board a lot of savvy goliaths of the e-commerce industry from the likes of Amazon.com and Chewy.com which he co-founded and sold for $3.35 billion in 2017 to Petsmart.

The foundations are there for Gamestop to become "The" number 1 in the gaming industry, an industry that brought in $155 billion in 2020 and is reported to bring in $200+ billion by 2023. Think GameStop as the next potential Amazon.com with the potential for much more than just gaming but audio and visual and partnering with massive Industry leaders.

Brick and Mortar Gamestop stores will be closed down and new
huge superstores opened up with gaming centers inside, restaurants / pizza chains. The ability to go play the new games before you buy them. Huge Tournaments for gaming players around the world, making it a huge sport bringing vast amounts of money from sponsors and alike. Being able to compete or watch the tournaments online...with the eventuality of a worldwide knockout event Finals being held in places like Las Vegas, New York, London, Paris, Sydney and Tokyo.


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#637575 - 21/03/21 03:56 AM Re: Naked Short Selling The Truth Is Worse Than What's Been Told [Re: Pickles]
Pickles Offline
1st Team Squad

Registered: 23/12/15
Posts: 5212
Gamestop shares after all this skullfu...ckery from the hedgefunds is over, will I believe in it's own right will sensibly command $1200 per share, once Ryan Cohen's vision is instilled and it opens up to become an e-commerce giant alongside with it's mega gaming stores.

Please take the time to have a visit and read all the due diligence that has been collected and stored here>>>

https://www.reddit.com/r/GME/comments/lj1wqv/a_comprehensive_compilation_of_all_due_diligence/

It is updated daily and confirms the futile position of these Hedgefunds who continue to kick the can down the road, bleeding out their a....sses from interest payments.

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#637581 - 21/03/21 02:41 PM Re: Naked Short Selling The Truth Is Worse Than What's Been Told [Re: Pickles]
Pickles Offline
1st Team Squad

Registered: 23/12/15
Posts: 5212
HUGE story from Forbes yesterday

Feb 20, 2017,09:17am EST
Reddit Is Being Manipulated By Big Financial Services Companies


Reddit is being regularly manipulated by large financial services companies with fake accounts and fake upvotes via seemingly ordinary internet marketing agencies.

“I work with a number of accounts on Reddit that we can use to change the conversation. And make it a bit more positive.”

This was the startling admission of a professional-looking marketing agency that, in a phone call with me, openly bragged about manipulating conversations on Reddit.

This wasn’t a one-off, nor was it the result of weeks of plumbing the depths of the dark web looking for shilling services. Finding this agency, and several others, took less than a few hours of basic Googling.

The business of Internet shilling - posing as a genuine forum user but being in the employ of a corporation to promote their work - is booming. And it has been for a long time. From fake Amazon reviews to the U.S Army astroturfing social media, comment manipulation is as old as the very concept of internet forums.

Fake comments and fake conversations being hard to spot, especially when they’re made by specialist agencies, makes shilling big business.

Nowhere is this more apparent than on Reddit. Being the world’s 22nd most popular website and the U.S.’ 7th makes it a popular target because of the hundreds of millions of eyeballs it attracts every month.

In December last year, I managed to place two entirely fake news stories onto influential subreddits - with millions of subscribers - and vote them to the top with fake accounts and fake upvotes for less than $200. It was simple, cheap and effective.

What I hadn’t realised at the time was how widespread this shilling issue was. Professional marketing agencies, with offices in several different countries, offer these services often under the guise of "reputation management." They don’t specifically talk about manipulating conversations online, instead using coded, dog whistle language like “targeted techniques” and “competitor slander.”

But, to verify that these companies are selling professional forum manipulation services, I had to get in contact. So I developed a back story and called a few agencies.

The first UK-based agency I spoke to was more candid than the language on its website. A representative brazenly told me that it had handled “multinational and multilingual” campaigns for forex (financial and currency exchange) companies. As if it was an everyday, pedestrian activity to wage war on authentic discourse on behalf of a faceless corporation.

When pressed on his exact methods, he explained “Well there's different IP addresses, they have real emails behind them that aren't anything to do with your company at all, different avatars, you know, if you can tell me roughly what they're saying, we can rework it so it looks natural. So we'll make an effort to make it look natural.”

He continued, “I work with a number of accounts on Reddit as well that we can use and just, basically, change the conversation. And make it a bit more positive. We can get rid of the negative thread and just start a new thread”.

He didn’t go into specifics of which companies - and didn’t offer links to previous campaigns even after I repeatedly asked, explaining that he valued customer privacy. Which is why I’ve chosen to not name the agencies, because I can’t verify the work they’ve done outside of the claims the agencies themselves have made.

This is part of the problem, despite the efforts of myself, and the Point team, we couldn’t find obvious fake comments, despite it clearly being widespread. These are, after all, professional services and all boast about their ability to blend in. If we’re specifically looking for fake comments and find none, how can the average user?

For this particular service, I was quoted £1200 per month for unlimited conversation and vote manipulation. This wasn’t a one-off, at least four other agencies offered similar services. These aren’t underground, single-person organisations running out of their parents’ basement. These are professional, fully staffed companies with international offices and, ostensibly, fee-paying clients.

Another U.S.-based marketing firm I spoke with was even more candid.

“Work on Reddit is very sensitive, and requires hiring of Reddit users with aged accounts who have good standing in the community.

"We do have a few existing users on staff, but for each campaign we create a custom roadmap and staff it accordingly, as unless the comments come from authentic users with an active standing in the community in question they will immediately be called out - and that has the opposite effect of damaging your reputation. Our success at shifting the conversation depends heavily on who we find and vet for the process.”

The agency’s representative continued to tell me the extent of their work.

“I have worked over 100 of these kinds of campaigns and never had it come back on the client. I've been doing viral marketing and reputation management since 2005. =In the past year I've worked for a major entertainment network to magnify a rumor within sports entertainment, as well as damage control on a rumor that came out of an actor being hired on a film before the production company was ready to announce that casting.”


Shilling services from an online marketing agency. Image credit: Jay McGregor

To get a better picture of the extent of the problem, I spoke to with two influential Reddit moderators who are the site’s first line of defence against malicious use of Reddit.

Robert Allam, who moderates 70 subreddits, and English06 (he didn’t want to reveal his real name), who moderates the influential r/politics sub, had strong opinions on shilling.

Check out my interview with Reddit's most (in)famous user, Gallowboob


Both agreed that the issue is apparent and that they could do with more tools to stave off the onslaught of fake comments. At the moment, they can only tell if a post isn’t genuine by the user’s account history; how old it is and how much karma it has (Reddit’s point system where users are rewarded for posting content).

If an account has good karma and is relatively old, then it “immediately rules out a lot of suspicions” Engish06 told me.

But this isn’t an effective way of spotting fakers. The agencies I spoke with explicitly talked about using aged accounts, and when I spoke with an account dealer late last year, he sent spreadsheets of usernames for sale of various ages.


Reddit accounts for sale. Image credit: Jay McGregor

English06 - who compares the moderator role to being a forum janitor - explained that to properly solve the problem, the volunteer moderators need more tools, or admins (Reddit staff) need to step in more.

“I think we're doing the best we can with the tools we have available. We're able to look at user history and stuff and determine a lot of it but as far as doing it on a larger- I mean, politics is the second busiest subreddit behind The Donald on Reddit. There's a lot going on.

"There's always something to be done on the politics subreddit. And it's just, there's just a lot of volume. As far as stopping everything, there's nothing the moderators will ever be able to do. We can only see the user history. That's going to have to come from
the admin side of things. There's just nothing we can do.”

It’s not uncommon, too, for moderators to be targeted by companies that want to manipulate influential subreddits.

“You can make money off Reddit. I've gotten a lot of offers to try and plug products, just make a gif out of a video, plug it, try to link stuff, some articles, some shady articles that just- they're like, yeah, if I send you an article could you post it?” Allam explained.

He continued “there was a Chinese company that wanted to send me a drone and something else, some gadget, and for me to film it and post it for money but then- I don't know how to film stuff. I'm not interested in promoting products like that because I'm not a producer, what the hell am I going to do? How is that fun? Even if I did, it would kill my whole presence on Reddit.”

Allam, who works for a viral video company, has had to make it clear to his employers that wouldn’t consider using his position to promote their videos, despite being asked.

“I have everything to lose. And if I lose everything, it's just not worth it for what? More money? Obviously, if they paid me, like, $5,000,000 to post something, [oops] yeah I'm posting that but, you know what I mean, for a salary, what? Am I going to shill my account on Reddit? It's personal, I enjoy it, it's how I made a name for myself and I do take a weird pride in it.”

Clearly, Reddit is being manipulated and gamed on a wide scale by companies who want to promote a specific cause, product or politician. This isn’t just a fake news problem, it’s a fake conversations problem. If fake news can be solved with fact-checking, how can fake conversations be stopped when the commenter isn’t interested in anything other than debating you into submission?

The wider implications of are damaging too. Non-engaged users (those who read but don’t comment) are often swayed by the overall tone of the conversation.

I presented Reddit with my findings and asked it if it’s doing enough to combat fake comments, threads and upvotes. But in a bizarre response, the company’s representative - Anna Soellner - didn’t bother to address any of these questions, instead providing a statement that seemed to be a response to my previous story.

“In order to write your story, you and your co-author engaged in multiple levels of impersonation, violating the terms of service of Reddit. Our users recognized the stories you posted as fake and community moderators removed the links in a very short time frame. We are continuously working with our users and moderators to ensure the integrity of our site to promote genuine conversation.” Soellner said.

Whilst I didn’t manage to get these agencies to spill the specific campaigns and companies they’ve worked with, scanning Reddit’s HailCorporate thread reveals some very suspect posts. This thread about Red Bull, in particular, looks like clear marketing. It was
eventually deleted and the user account was removed once it was called out as marketing.


Alleged Red Bull marketing. Image credit: Jay McGregor

The ubiquity of Reddit manipulation, and the ease with which anyone can employ these agencies - or even tactics - should be of concern to millions of Reddit users. Genuine, real user-generated content is key to Reddit’s success. Without the assurance of that authenticity, it makes it hard to take anything on Reddit - and indeed any other popular forum - seriously.

https://www.forbes.com/sites/jaymcgregor...sh=440bd78d4c92

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