Keith Gill, the Massachusetts financial educator who became the grassroots YouTuber who became a popular Reddit hero for his initial investment in GameStop, before a massive increase – and subsequent fall – in the company’s stock, being sued in a lawsuit collective.
The lawsuit, filed in federal court in Massachusetts, alleges that Gill “took on the false personality of an amateur, common companion, who was simply looking out for the boy” in order to recruit investors for the short run, thus constituting a securities fraud. .
Gill – who has more than 400,000 subscribers to his YouTube account, Roaring Kitty – was acting as a Massachusetts Mutual securities broker, according to the lawsuit.
When a user named DeepFuckingValue made his first post on Reddit’s r / WallStreetBets forum in September 2019, it didn’t cause too many problems on a message board where retail traders often share their strange stock bets and losses. “Holy shit, man, what made you lose 53K on the gamestop?” one user commented.
At that time, shares in the video game store were trading at around $ 5 each. Still, Gill, then posting anonymously on the account, continued to share his updates; and Reddit’s retail investors, along with some hedge funds, soon boarded the train. In January, GME’s shares were trading at just under $ 500, with Gill’s initial investment reaching a payment of up to $ 48 million, according to the lawsuit.
A post that Gill wrote on January 27 about his maximum payout, “is full of [WallStreetBets] users recount how Gill encouraged them not only to buy shares of GameStop, but also inspired them to keep their shares in order to manipulate the market to guarantee a loss for those who hold short positions, “says the lawsuit.
The lead plaintiff, a Washington state man named Christian Iovin, “used approximately $ 200,000 in collateral to sell GameStop’s stock option contracts when the shares were below $ 100,” the suit says. Iovin and his lawyer, Reed Kathrein, declined to comment for this article.
On his YouTube channel, where he offers “live educational streams where I share my daily stock tracking and investment research routine,” Gill repeatedly directed viewers to a potential short purchase of GameStop shares, where investors buy a stock they are betting heavily on. Of the 80 videos on Gill’s channel, 56 refer to GameStop, the suit says.
The suit also names MassMutual, Gill’s former employer, as a defendant, claiming that the insurer had “legal and regulatory obligations to supervise Gill to prevent such conduct.”
According THE Wall Street Journal, Gill resigned from his job at MassMutual on January 28, the day after his maximum pay, and the day before his first public interview, also with the daily, was published.
Gill’s actions have also caught the attention of state and federal officials. William Galvin, Massachusetts Commonwealth Secretary, issued a subpoena against Gill earlier this month, with the aim of investigating whether his daily work affected his negotiations, according to The New York Times.
MassMutual told the Times who did not know about Gill’s negotiations until he resigned on January 21 and would have asked him to stop, if they had known. MassMutual did not immediately respond to a request for comment on this article.
Gill is due to testify on Thursday, along with CEOs of Reddit and Robinhood, at a Congressional hearing on the increase in shares organized by Rep. Maxine Waters (D-CA), chairman of the House’s Financial Services Committee.
In prepared statements released on Wednesday before his testimony in Congress, Gill denied any wrongdoing.
“The idea that I used social media to promote GameStop shares to unconscious investors is absurd,” says Gill. “I was very clear that my channel was for educational purposes only and that my aggressive investment style would hardly be suitable for most people who access the channel.”
GameStop investors also filed a class action lawsuit against the trading app Robinhood last month after it restricted trading to GameStop and other popular stocks on r / WallStreetBets, causing Redditors and app users to collapse.
You can read the process here.