Keith Gill, also known as “Roaring Kitty” on Twitter / YouTube and “DeepFuckingValue” on Reddit, is facing a collective action proposal for his role in the huge grasp of GameStop orchestrated by Reddit’s r / WallStreetBets board, Bloomberg reported on Wednesday.
According to Bloomberg, the lawsuit was filed by Hagens Berman Sobol Shapiro, a class-action firm on behalf of Christian Iovin of Washington, who sold $ 200,000 in GameStop stock options when they were less than $ 100 each. This proved to be a very bad bet, as users on r / WallStreetBet launched a organized effort to pump GameStop and other low-performing actions, such as AMC and BlackBerry, with nostalgia value that ultimately it was very successful. As the main sharks on Wall Street quickly understood and united in an effort driven by Reddit, GameStop’s stock skyrocketed to $ 483, meaning disaster for traders who shorted the company’s stock. As a result, Iovin was forced to repurchase his connections at inflated rates, according to the lawsuit. GameStop is now at $ 46 per share, still significantly higher in early 2021, when it traded in the $ 19 range.
Gill was a leading proponent of the GameStop rush in his social media accounts, and according to CNBC, posted on Reddit that it earned at least $ 7.8 million from the company’s stock. The lawsuit accuses him of not being a layman, but of a licensed securities broker who deliberately manipulated the company’s stock price to get rich quickly.
“Gill’s deceptive and manipulative conduct not only violated several industry regulations and rules, but also several securities laws, by undermining GameStop’s stock market integrity,” said the class action proposal, according to Bloomberg . “It caused huge losses not only for those who bought option contracts, but also for those who fell into Gill’s act and bought GameStop shares during the market frenzy at highly inflated prices.”
According New York Times, the class action proposal cites Gill’s multiple brokerage licenses and also cites MassMutual’s brokerage arm – where Gill worked until a few weeks ago, and which the complainants claim to have not properly controlled their market activities. The Times also noted that Massachusetts state securities regulators are investigating whether their posts potentially violate industry law or rules. (The Securities and Exchange Commission has issued vague threats to everyone involved in the speculative frenzy, including the stock trading app Robinhood, but has yet to execute them.)
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Gill is vigorously fighting claims that he was trying to manipulate the market for his own benefit. The tightening in sales was only possible because hedge funds like Melvin Capital eagerly took up big short positions on GameStop, presenting an opportunity for investors to make a lot of money if stocks went up while hedge funds lost their shirts. The Chamber’s Financial Services Committee is holding an audience on Thursday the whole fiasco of r / WallStreetBets, with Gill scheduled to testify. Others scheduled to speak include Vlad Tenev, co-CEO of Robinhood, Steve Huffman, CEO and co-founder of Reddit, and Gabriel Plotkin, CEO of Melvin Capital.
In his prepared observations for the Chamber, Gill stated that his position as Director of Financial Wellness Education at MassMutual had been totally disconnected from his parallel role as a stock market commentator and that he genuinely believed that GameStop had “the potential to reinvent itself as the ultimate destination for gamers within the thriving $ 200 billion gaming industry. Gill added that just a few months ago, in December 2020, his YouTube and Twitter accounts had only a few hundred followers each and he didn’t believe he had the ability to influence markets.
“The idea of using social media to promote GameStop shares to unsuspecting investors is absurd,” wrote Gill. “I was perfectly 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. Whether other individual investors bought the shares was irrelevant to my thesis – my focus was on the fundamentals of the business. “
Gill added that “others will have to explain” exactly what happened to GameStop.
“Here’s the thing: I have a little experience and I even barely understand these issues,” he wrote. “It is alarming how little we know about the internal workings of the market, and I am grateful that this Committee is examining what happened.”
Gill’s lawyer, William Taylor, declined to comment in the Times, while MassMutual told the newspaper he was investigating the matter.