| Author | Source |
|---|---|
| u/luridess |
luridess on her way to 🦍,🦍&🍌 LLP
Edits:
Added list of previous Legalese to 🦍Speak posts at the end
Edited bullet points under GME’s reference to the January short squeeze for clarity
UPDATE 1: “To the Extent” in Legalese = “If” in 🦍 Speak, with reference to GME’s statement about its shorted stocks and why GME didn’t actually confirm that its stocks are currently shorted. See update at end of post.
EDIT: For more DD on Gamestop’s other SEC filings and their implications, please refer to this excellent post by u/Antioch_Orontes
UPDATE 2: How a person reads a sentence vs. the actual legal meaning (IMPORTANT - SEE AT END OF POST)
UPDATE: Added an American example of “To the Extent” = “If” to UPDATE 1
UPDATE: added links to some comments from fellow apes & ape lawyers about their understanding of “To the extent” in UPDATE 1
Edit: Updated the point of my post from two to three items.
Edit: Apparently the SI IS OVER 9000?! Post from another wrinkly brained ape: https://www.reddit.com/r/GME/comments/mfv3jg/the_short_interest_is_over_9000/?utm_source=share&utm_medium=web2x&context=3
The point of this post is to do three (not two) things:
Explain to you how to interpret SEC Legalese to 🦍🦍🦍 speak;
Provide my own theories on why GME referred to the short squeeze in their SEC Filings Form 10-k (based on my interpretation of the legalese); and
To provide an explanation of ANOTHER PIECE of the GME puzzle. This DD is not meant to replace all of the other excellent DD out there that deals with all the calculations, conclusions, explanations, etc. I encourage you to read everything and understand that this is just another tool in the toolbox. This post is meant to complement existing theories and DD that have relied on non-legalese data.
*NOT LEGAL ADVICE, NOT FINANCIAL ADVICE. FULL DISCLAIMER AT BOTTOM OF POST
Important - Different 🦍s can come to different conclusions when reading legalese, AND THIS IS OK!
Conclusions & theories based on reading/interpreting legalese IS NOT THE SAME as conclusions & theories based on reading/interpreting numbers.
🦍🦍🦍 example:
In Math, 🍌+🍌= 🍌🍌
In Legalese, if I have 🍌 and you have 🍌 MAYBE that means we have 🍌🍌 together.
But what if I don’t want to combine my 🍌 with your 🍌?
In that case just because you have a 🍌 and I have a 🍌 , doesn’t necessarily mean that WE have 🍌🍌.
The answer could just as easily be that if I have 🍌 and you have 🍌 , all that means is that we each have one 🍌.
Confused?
Welcome to the practice of law!
This is why we have court hearings, because there are two (or multiple) sides and theories to different situations and it’s up to a judge to figure out which side is most likely correct.
So what does this mean about my posts/DD?
It means that I have my theories based on my interpretation of the legalese.
BUT I’ve seen a lot of excellent comments/messages from other 🦍s with different (and equally excellent) opinions of their takeaway from interpreting legalese.
And this is perfectly ok! Because this is what the practice of law is all about.
🦍🦍🦍 SPEAK: What we know so far from the legalese:
Source: GME 2021 SEC 10-K
thank you u/habitualpotatoes and u/Suspicious-Peach-440 for pointing out that Gamestop didn’t confirm their SI was over 100% in numbers.
I jumped ahead of myself because what I initially stated above is actually my CONCLUSION based on the facts (legal and god-tier DD) available.
I’ve corrected the “facts” section to reflect this important distinction.
GME’s 10-k referenced a short squeeze that happened in January.
u/Suspicious-Peach-440 points out that the filing refers to a short squeeze at the end of fourth quarter fiscal 2020
Page 22 of the filing refers to a “short squeeze” that happened at the end of Fourth Quarter Fiscal 2020
Source: GME 2021 SEC 10-K page 22
You might be thinking - SO WHAT? We all know that the price spiked up in January. That’s probably the short squeeze they’re referring to that happened in the past.
what… oh wait? Does this mean that the MOASS all the wrinkly-brained apes have been talking about and referring to in their DD already happened and it’s over, because they referred to the January squeeze?
Maybe… Possibly… Potentially…
EXCEPT…
Source: GME 2021 SEC 10-K
Not only that, but they also confirm that there have been no material changes up to and including March 17, 2021, to account for such price volatility
🦍🦍 speak: we don’t know what’s going on but guys it’s not us.
We also have GOD-TIER DD from the mods, with at least one post confirming that: Shorts haven’t covered yet
🦍🦍🦍 TLDR:
If you read between the lines, GME CONFIRMED on March 23, 2021 in their SEC 10-K filing that:
their stock was shorted as of January 31, 2021;
a short squeeze happened in January 2021;
a “large proportion” of their stock “may continue to be traded by short sellers”;
with a “likelihood” that GME will be the target of a “short squeeze”; and
and this is based on dates/numbers/facts up to and including March 17, 2021.
🦍🦍🦍 SPEAK: PUTTING IT ALL TOGETHER - My conclusion based on the information above:
If you read between the lines, GME CONFIRMED on March 23, 2021 that:
the short squeeze in January wasn’t the MOASS
The short squeeze isn’t over, despite what media/shills are saying
There is a strong possibility of a short squeeze happening
This is based on data up to and including March 17, 2021
if their stocks continue to be shorted:
then shorts may have to pay a lot of 🍌 to cover their butts
this will “dramatically increase” the price of 🍌
CONFIRMATION BIAS CONFIRMED! u/greysweatseveryday (a securities lawyer ape) agrees with my reading between the lines conclusion. Comment can be found here thank you fellow lawyer ape! 🙏
🦍🦍🦍 SPEAK: Why is GME doing this?
My own personal theory for why they’d do this:
To confirm that the January squeeze WAS NOT THE MOASS
to cause a catalyst by third parties so 🍌🚀🌕,
while covering themselves in case anyone accuses them of price manipulation,
and also basically saying that anyone who says the squeeze was squozen is incorrect and don’t listen to shills/fud.
Other excellent theories:
u/greysweatseveryday is a securities lawyer 🦍 who’s made some excellent comments and I suggest you go through their comment history because their have more wrinkles than me when it comes to the nuances of securities law.
u/habitualpotatoes: Far more interesting is the the repeated references to the fact that having the shares over shorted produces risk and instability in the operation of the company. Therefore they’re setting up a legitimate reason to undertake action to explicitly get rid of short sellers. Without this, I think they could be in interesting legal water in the price manipulation territory but at the very least they wouldn’t be able to force institutions holding their shares to comply with a complete recall for vote - where in the past only some shares were recalled when it was optional.
u/the_captain_slog makes an excellent point here regarding rarity of the language and that this is an attempt to create legal boilerplate
u/flgirl04 compares the squeeze language to the WV/Porsche language
u/eispac has somegood theories as well.
UPDATE 1: LEGALESE TO 🦍 SPEAK: the meaning of “To the extent that”
UPDATE: u/JabbaLeSlut asked an excellent question, saying that unless they’re missing something, GME confirmed it’s been shorted 100%.
In my initial post, I also made this statement, but In my excitement to share my DD I forgot to clarify that this was NOT a fact, but was instead a CONCLUSION, and I was making this CONCLUSION based on a reading all of the facts from the God-tier DD and coupled with my own legalese interpretation of the SEC filing.
Another example of why words matter, especially in legalese.
Anyway, a lot of people are interpreting this paragraph of GME’s SEC filing:
Source: GME 2021 SEC 10-k
BUT –> notice something in that huge block of text?
Source: GME 2021 SEC 10-K
“To the Extent”
You might think this is just some fancy legalese to make everything sound more official and important, but remember that EVERY WORD IN LEGALESE MATTERS!
So what does “To the Extent” Mean?
Remember when I told you that entire court cases have revolved over the meaning of a word, comma, a phrase, etc?
You think I was joking?
Here’s a case where the parties were LITERALLY arguing the meaning of the phrase “To the Extent” and the judge had to figure out which definition was the right one.
TLDR of the judge’s decision: “To the extent” = “IF”
UPDATE: AMERICAN EXAMPLE OF “To the extent” = “IF”
UPDATE:
🦍 SPEAK CONCLUSION:
Gamestop is saying: we’re not telling you that our stock is currently shorted over 100%, BUT IF our stock is shorted over 100%, then the MOASS is a strong possibility.
UPDATE 2: LEGALESE TO 🦍 SPEAK: How people read it vs how lawyers read it AND WHY THIS MATTERS
I’m seeing some comments about how “this legalese interpretation is interesting but I disagree and this is how I read/interpret it”.
First of all, THANK YOU everyone for keeping your comments and discussions civil and respectful, this is SO IMPORTANT especially when debating different positions/ideas/opinions.
You are of course entitled to your opinion, but that doesn’t mean your opinion is necessarily CORRECT if you have to DEFEND IT IN A COURT OF LAW.
This is why lawyers will spend hours and hours reading and reviewing past court cases with similar situations to figure out if their position is right or not. (Think of every single Suits Montage you’ve seen where they are pouring over books/computers preparing for a court case the next day)
Example #1: “Without Limitation”
I was inspired to write my first post because a lot of people were incorrectly interpreting the phrase “without limitation” to mean that GME confirmed, without a doubt, that there is a short squeeze with an unlimited price coming.
And while that is what we all want, it’s COMPLETELY incorrect to assume that, especially with all of the legal disclaimers and phrases they are using.
I explained why, in my first post, the phrase “without limitation” does not in fact refer to the value of the short squeeze, and instead refers to the fact that the list of factors is not exhaustive.
Example #2: “To the Extent”
While some are saying that they still read GME’s sentence to mean that they are confirming the stock is currently shorted despite what I’ve said, I’m here to say that that’s your opinion and you’re entitled to it.
BUT
I’m here to give you some DD by telling you that, in legalese, this is completely incorrect.
And I’ve even provided official court cases to support my DD that “To the Extent” means “IF”. (See Update #1)
I know this is not the good news that you want to hear.
BUT if you want to learn how to read SEC documents, or any legal documents, especially to help yourselves in the future, please understand that these interpretations I’m providing are not coming out of thin air.
There’s a reason that I’m interpreting LEGALESE TO 🦍 SPEAK, and that reason is that if you don’t know which words/phrases/grammatical structures to look out for, there is a strong possibility that you will completely misunderstand what is being said.
u/CecaniahCorabelle made an excellent point: “Not arguing either but how you read it versus what is actually legally represented is different.”
Previous Legalese to 🦍 Speak Posts:
FULL DISCLOSURE:
This is not financial advice, this is not legal advice.
I am NOT a securities lawyer. I do not prepare and file SEC forms.
I am a customs/duties/tariffs litigator**, dealing with international WTO hearings and hearings similar to those at the USITC.
SEC filings are a very important part of my practice because auditing and cross-examining a company’s financials, including their SEC filings, is a key part in determining whether or not there has been injury caused by dumped/subsidized goods.
My job is to read/review SEC forms, litigate them, find the loopholes, find the errors, find the language/terminology that can either support or not support a potential claim, and that includes cross-examining those who are responsible for them (CEO, CFO, COO, etc, depending on the case and who is available etc).
This is also a learning exercise for me. The reason that I started looking this stuff up was because I was personally fascinated with what was going on, and I wanted to learn more. I decided to share what I’ve found out, and my personal thoughts, with everyone. I am on a learning journey and just taking you along for the ride. If I find something later in my research that is different than what I’ve said here, I will of course update this and provide explanations.
If you are a securities lawyer or have any additional information that can help clarify/correct/elaborate on this post, please comment below and I will add the edits.