AMC Entertainment Holdings Inc. Requests Investigations Into High Failures to Deliver

AMC Entertainment Holdings Inc., the esteemed American movie theatre chain, has been placed on the threshold list for over three weeks, triggering concerns regarding potential market manipulation and naked short selling. Adam Aron, the company's Chief Executive Officer, has, therefore, taken a decisive step and implored both the New York Stock Exchange (NYSE) and the Financial Industry Regulatory Authority (FINRA) to conduct a thorough inquiry into the trading of its stock.

Many of you, and we, are aware that AMC Entertainment has been on “The Threshold List” for 3+ weeks, indicating a number of FTD’s. Some of you may be pleased to learn that we have contacted both FINRA and the NYSE asking that they both look closely at the trading of our stock. — Adam Aron (@CEOAdam) March 7, 2023

Threshold securities are stocks with an exceptional number of fails-to-deliver (FTDs), a phenomenon that transpires when a buyer is unable to acquire the securities they have bought, and the seller fails to deliver the securities they have sold. The reasons behind such a predicament could be manifold, ranging from a mismatch in the settlement process to the seller not having borrowed or bought the securities that they are selling.

When a stock is deemed to be a threshold security, a set of regulations is triggered to minimize the risk of naked short selling, which happens when a seller shorts a stock without borrowing or owning the underlying securities. This practice can distort the market, harming investors, and hence, it is crucial for regulators to investigate and act upon it when necessary.

In the case of AMC Entertainment Holdings Inc., the company has been placed on the threshold list for over three weeks, indicating a significant number of FTDs related to its stock. Reports suggest that in February alone, the number of FTDs surpassed 6.8 million, culminating in over $36 million in failed-to-close orders.

The company's worries do not solely pertain to FTDs, as there have been reports of potential market manipulation and distortions in the stock price, causing concerns about the possibility of naked short selling. Naked short selling can be especially detrimental to companies and investors as it can artificially deflate the stock price, making it arduous for companies to raise capital and investors to realize their gains.

The sizeable number of FTDs linked with AMC's stock and apprehensions regarding market manipulation and naked short selling has compelled the company to call for investigations by both the NYSE and FINRA. However, some investors and analysts have criticized the company's CEO for not being more forceful in his stance on the issue.

Investors holding stocks that are on the threshold list or have a high number of FTDs face the risk of losses due to market distortions and potential market manipulation. Hence, regulators must investigate such situations and take necessary measures to ensure a fair and transparent market for all parties involved.

The concerns regarding threshold securities and FTDs linked with AMC Entertainment Holdings Inc.'s stock underscore the need for persistent vigilance and engagement from all parties participating in the trading process. It is essential to promote transparency and accountability in the market and work together to establish a fair and just system that is founded on principles of equity and fair play.

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