Keith Gill, also known as “Roaring Kitty” on Twitter / YouTube and “DeepFuckingValue” on Reddit, is facing a class action lawsuit for his role in the massive GameStop short orchestrated by Reddit’s r / WallStreetBets, Bloomberg reported Wednesday.
According to Bloomberg, the lawsuit was filed by Hagens Berman Sobol Shapiro, a stockbroker, on behalf of Washington State Christian Iovin, which sold $ 200,000 in GameStop stock options when it was worth less than $ 100 per share. That turned out to be one very bad bet, while r / WallStreetBet users launched a file organized effort to pump GameStop and other low-performance stocks, like AMC and BlackBerry, with a nostalgia value that finally he was quite successful. How the Wall Street sharks quickly got it nailed and joined the Reddit-driven effort, GameStop shares rose to $ 483, the spelling disaster for traders who sell short of the company’s stock. According to the lawsuit, Iovin was forced to recover calls at inflated prices. GameStop now stands at $ 46 per share, still significantly higher in early 2021, when it was trading in the $ 19 range.
Gill was one of the main proponents of the rush on GameStop on their social media accounts and according to CNBC, posted on Reddit that it earned at least $ 7.8 million in the company’s shares. The lawsuit accuses him of not being a layman, but of an authorized securities agent who deliberately manipulated the company’s share price to get rich quick.
“Gill’s misleading and manipulative conduct not only violated numerous industry regulations and rules, but also several securities laws in undermining the integrity of the GameStop stock market,” the class action proposal said, according to Bloomberg. “It caused huge losses not only to those who bought option contracts, but also to those who fell for Gill’s stock and bought GameStop shares during the market frenzy at very inflated prices.”
According to the New York News, the class action lawsuit cites Gill’s multiple broker licenses and also names MassMutual’s brokerage arm, where Gill worked until a few weeks ago, and which plaintiffs claim could not control their market activities . The Times also noted that Massachusetts state securities regulators are studying whether their messages potentially violate industry law or regulations. (The Securities and Exchange Commission has done so) he made vague threats to all the people involved in the speculative frenzy, including the Robinhood stock trading app, but has not actually carried them out).
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Gill fights intensely against claims that he was trying to manipulate the market for his own benefit. The short cut was only possible because hedge funds like Melvin Capital had acquired greedily large short positions on GameStop, offering investors the opportunity to make money if stocks rose while hedge funds lost their shirt. The House Financial Services Committee is holding an audience Thursday to the full failure of r / WallStreetBets, with Gill scheduled to testify. Others planned to talk to include Robinhood co-CEO Vlad Tenev, Reddit CEO and co-founder Steve Huffman, and Melvin Capital CEO Gabriel Plotkin.
On his prepared comments in the House, Gill claimed that his position as Director of Financial Education on the Welfare of MassMutual had been completely disconnected from his concert as a stock market commentator and that he had sincerely believed that GameStop had “the potential to reinvent- as a final destination for players in the thriving $ 200 billion gaming industry. ”Gill added that just a few months ago, in December 2020, his YouTube and Twitter accounts had a few hundred followers each and did not believe he had the ability to influence the markets.
“The idea that I used social media to promote GameStop shares to involuntary investors is absurd,” Gill wrote. “I was very clear that my channel was for educational purposes only and that my aggressive investment style was unlikely to be appropriate for most people who consulted the channel. The fact that other individual investors bought the shares was irrelevant to in my thesis, my focus was on the basics of business. “
Gill added that “others will have to explain” exactly what happened with GameStop.
“Here it is: I’ve had a bit of experience and I even barely understand those issues,” he wrote. “It’s alarming how little we know about the internal functioning of the market and I’m grateful that this committee is examining what happened.”
Gill’s lawyer, William Taylor, declined to comment to the Times, while MassMutual told the newspaper it is studying the matter.