Keith Gill, the stock trader known for his role in the 2021 GameStop frenzy, is facing securities fraud claims.
In early June 2024, a class-action lawsuit was submitted to the Eastern District of New York against an individual named Gill. The complaint alleges that Gill orchestrated a manipulative trading scheme, utilizing multiple social media posts, which resulted in dramatic price swings for GameStop (GME) shares between May and June 2024.
“Roaring Kitty” Accused of Manipulating GME Stock Price
“The grievance asserts that ‘Roaring Kitty,’ exploited his social media power to artificially inflate GameStop’s share value for his own advantage.”
I started buying GameStop call options on E*Trade back on May 12, 2024, at affordable prices. The following day, I made my first post about GameStop on X after a long hiatus of nearly three years. My action ignited curiosity among others, leading to an increase in the stock’s value.
On June 2, 2024, Gill shared on Reddit his ownership of GameStop securities comprising 120,000 call options and 5 million shares. This disclosure led to a significant surge in GameStop’s stock price, closing above $45 for the day. By June 13, 2024, Gill announced that he had exercised all his call options, earning substantial profits. He subsequently employed these proceeds to amplify his holdings in GameStop by acquiring over 4 million additional shares.
Martin Radev, the complainant, asserts that he endured financial damages due to Gill’s suspected manipulation. In May, Radev acquired 25 shares of GME and three call options, inspired by Gill’s social media content. The lawsuit alleges that Gill neglected to disclose his plan to sell his options, deceived investors with misleading information, and ultimately inflicted financial harm on them.
Legal Expert Says Case is “Doomed from Its Inception”
As a researcher looking into this legal matter, I’ve come across differing opinions regarding the merit of the lawsuit. In a blog post dated June 30, Eric Rosen, a former federal prosecutor, expressed his viewpoint that the class-action complaint may not be successful. He argued that the case could potentially be dismissed by the court with a carefully crafted motion.
As a crypto investor, I understand Rosen’s perspective when he states that it’s unrealistic for Gill to be expected to disclose his plan to sell his options before they expire, since no rational investor would keep holding onto options indefinitely.
As an analyst, I would advise against basing investment decisions solely on the tweets of an individual meme stock icon. A prudent investor, who diligently reviews earnings reports and stays updated on company news, would not consider such social media posts as valuable information for making buying or selling decisions. It is not rational to invest in securities based on innocuous tweets from Roaring Kitty or any other individual.
The plaintiff’s case hinges on the belief that Gill’s social media content significantly impacted their investment decisions, a claim that might be challenging to substantiate in a court of law.
Rosen highlighted that establishing securities fraud involves proving that the suspect deliberately deceived investors by concealing essential information. However, the memes shared randomly by “Roaring Kitty” on social media do not contain assertions that can be definitively verified or refuted.
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2024-07-01 13:30