<story><title>Nikola founder to be sentenced for federal fraud charges</title><url>https://www.cnbc.com/2023/12/18/nikola-founder-trevor-milton-sentencing-fraud-charges.html</url></story><parent_chain><item><author>tony69</author><text>Part of the story is how passive index ETFs work. &lt;a href=&quot;https:&amp;#x2F;&amp;#x2F;www.etf.com&amp;#x2F;stock&amp;#x2F;NKLA&quot; rel=&quot;nofollow noreferrer&quot;&gt;https:&amp;#x2F;&amp;#x2F;www.etf.com&amp;#x2F;stock&amp;#x2F;NKLA&lt;/a&gt; sort by # shares owned, you&amp;#x27;ll see the biggest owners of NKLA stock are ishares funds, vanguard etc. These funds buy based on market cap of the stock.
Anyone with a retirement account that holds passive etfs (or things like target date retirement funds) is a stockholder in NKLA, a stock which no active fund manager would touch with a 10foot pole.&lt;p&gt;As passive accounts for more than half of the total market funds&amp;#x2F;flows, blatant frauds that somehow manage to be included in these funds have an easier time surviving (and the larger the market cap, the more inflows their shares receive).
In the 2021 stock mania there were other factors at play too.</text></item><item><author>sokoloff</author><text>The whole Nikola situation was fascinating to me at the time.&lt;p&gt;I shorted the shares and bought puts in the days to couple of months following the Hindenburg publication. I was surprised at how long the shares held up; they were still trading around $10&amp;#x2F;sh when I closed the last of my shorts at the end of 2021 (~15 months after the publication which was never substantially refuted and never substantially in doubt as far as I could tell).&lt;p&gt;I would have expected a much quicker and less orderly collapse of share prices and the absence of that made me question my understanding of the stock market entirely, specifically my previous belief that “all public information is quickly priced in.” (That is still not entirely resolved for me.)</text></item></parent_chain><comment><author>sillyinseattle</author><text>&amp;gt;  Anyone with a retirement account that holds passive etfs&lt;p&gt;This is incorrect. Not all ETFs. These funds are sector focused (vehicles). A regular S&amp;amp;P500 ETF will not hold NKLA.</text></comment>
<story><title>Nikola founder to be sentenced for federal fraud charges</title><url>https://www.cnbc.com/2023/12/18/nikola-founder-trevor-milton-sentencing-fraud-charges.html</url></story><parent_chain><item><author>tony69</author><text>Part of the story is how passive index ETFs work. &lt;a href=&quot;https:&amp;#x2F;&amp;#x2F;www.etf.com&amp;#x2F;stock&amp;#x2F;NKLA&quot; rel=&quot;nofollow noreferrer&quot;&gt;https:&amp;#x2F;&amp;#x2F;www.etf.com&amp;#x2F;stock&amp;#x2F;NKLA&lt;/a&gt; sort by # shares owned, you&amp;#x27;ll see the biggest owners of NKLA stock are ishares funds, vanguard etc. These funds buy based on market cap of the stock.
Anyone with a retirement account that holds passive etfs (or things like target date retirement funds) is a stockholder in NKLA, a stock which no active fund manager would touch with a 10foot pole.&lt;p&gt;As passive accounts for more than half of the total market funds&amp;#x2F;flows, blatant frauds that somehow manage to be included in these funds have an easier time surviving (and the larger the market cap, the more inflows their shares receive).
In the 2021 stock mania there were other factors at play too.</text></item><item><author>sokoloff</author><text>The whole Nikola situation was fascinating to me at the time.&lt;p&gt;I shorted the shares and bought puts in the days to couple of months following the Hindenburg publication. I was surprised at how long the shares held up; they were still trading around $10&amp;#x2F;sh when I closed the last of my shorts at the end of 2021 (~15 months after the publication which was never substantially refuted and never substantially in doubt as far as I could tell).&lt;p&gt;I would have expected a much quicker and less orderly collapse of share prices and the absence of that made me question my understanding of the stock market entirely, specifically my previous belief that “all public information is quickly priced in.” (That is still not entirely resolved for me.)</text></item></parent_chain><comment><author>hunter2_</author><text>Are these ETFs, target date retirement funds, etc. protected against class action lawsuits from shareholders who end up holding the bag due to the inclusion of fraudulent stocks like this? Obviously waivers are signed about how performance is never guaranteed, but that&amp;#x27;s a bit different from a need to timely exit positions in fraudulent companies.</text></comment>