July 7, 2020
To SEC Leadership:
The closing remark in the Statement Announcing SEC Staff Roundtable on Emerging Markets by Chairman Clayton says "The ability to inspect for and enforce our laws and regulations is of paramount importance to U.S. investors and our capital markets more generally. I look forward to continuing our work to ensure transparency and confidence in our markets."
I am afraid to say that countless investors have lost faith in the ability for the SEC to ensure transparency and confidence in our markets.
Go on social media and you will see investors voicing their opinions about the SEC and the Chinese listing GSX.
The comments express the lack of trust and confidence in the SEC's willingness to stick their neck out and delist a Chinese company before the house of cards falls on its own like Lukin.
People believe that the SEC is afraid to anger China. Or the US banks that are holding Chinese assets. That they only want to handle small time offenses and never stand up for the little guy.
I have more hope for the SEC. I understand that the commission is under staffed and at times limited in what they can do. But I also believe that the SEC can scrape together the resources and move fast for an urgent enough cause and in the process restore public trust by proactively protecting American investors.
If you just spend ten minutes looking into GSX you will know it's a fraud. It's that obvious. Any one of the 13 fraud reports will convince you just like it has convinced the market (look at the amount of shorts, puts, and daily volume without the insider buys over the last 60 days). But there's more to it than that. The stock manipulation is so obvious and poorly executed that it would be comical if it weren't for the real life damage that people are suffering.
A trader posted this morning that he had to close his short position because of a margin call and that he had lost his life's savings. Many others have posted similar stories of extreme losses. They probably shouldn't have put so much money into the position in the first place but I feel for them. GSX is so clearly a fraud that it didn't seem possible that it would go up by more than 2.4x in a month -- at least not without it coming on the SEC or NYSE's radar and one of them taking it down. But what wasn't accounted for was that corrupt people who would go to such lengths to rob from American investors would have no problem with breaking US law to purposely pump the stock. Why wouldn't they if there's no consequence?
But these Chinese stock pumpers don't even stop there. They add insult to injury by going on social media and poking fun at Americans pointing out how incompetent our system / regulation is for them to be able to get away with what they are and that they are easily taking our money. They are literally boasting about their ability to break US law and that the SEC does nothing about it.
I know this conference is meant to discuss policy and ways to avert the hypothetical disasters from taking place. But we have a live case right now that can't be ignored. GSX insiders are artificially inflating the price of the stock to values that aren't just irrational they're illegal white collar robbery of MANY BILLIONS of US dollars and they are causing real world hardships to good people. And making Chinese fraudsters rich on our dime. It's simultaneously maddening and saddening.
So with all of this said I write on behalf of thousands of US investors tangled up in the GSX web for you to stop the price pumping immediately and delist GSX ASAP.
Thank you for your service, enforcement of our laws and restoring confidence in our markets.
Regards,
Michael Lampizi, PhD