Keith Gill, also known as “Roaring Kitty” on Twitter / YouTube and “DeepFuckingValue” on Reddit, is facing a class action lawsuit proposed for his role in the short massive GameStop squeeze orchestrated by Reddit’s r / WallStreetBets board, Bloomberg reported On Wednesday.
According to Bloomberg, the lawsuit was brought by Hagens Berman Sobol Shapiro, a securities class action firm, on behalf of Christian Iovin of Washington State, who sold $ 200,000 in call options on GameStop shares when they were worth less than $ 100 per share. action. This turned out to be a very bad bet, as r / WallStreetBet users launched a organized effort to power GameStop and other underperforming stocks, such as AMC and BlackBerry, with nostalgia value that will ultimately it was quite successful. As the top Wall Street sharks aware and united In the effort fueled by Reddit, GameStop shares soared to $ 483, spelling disaster for traders who are short selling the company’s stock. As a result, Iovin was forced to buy back his calls at inflated rates, according to the lawsuit. GameStop now sits at $ 46 a share, still significantly higher in early 2021, when it was trading in the $ 19 range.
Gill was one of the main proponents of the GameStop onslaught on his social media accounts, and according to CNBC, posted on Reddit that he made at least $ 7.8 million from the company’s stock. The lawsuit accuses him of not being a layman, but a licensed stock broker who deliberately manipulated the company’s stock price to get rich quick.
“Gill’s deceptive and manipulative conduct violated not only numerous industry regulations and rules, but also various securities laws by undermining the integrity of the GameStop stock market,” the proposed class action lawsuit said, according to Bloomberg. “It caused huge losses not only to those who bought options contracts, but also to those who fell in love with Gill’s act and bought GameStop stock during the market frenzy at highly inflated prices.”
According to the New York Times, the class action proposal cites Gill’s multiple broker licenses and also names the brokerage arm of MassMutual, where Gill worked until a few weeks ago, and which the plaintiffs claim was unable to adequately control its market activities. The Times also noted that securities regulators in the state of Massachusetts are investigating whether their posts potentially violate the law or industry rules. (The Securities and Exchange Commission has issued vague threats everyone involved in the speculative frenzy, including the Robinhood stock trading app, but hasn’t actually carried them out.)
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Gill is vigorously fighting claims that he was trying to manipulate the market to his own advantage. The short contraction was only possible because hedge funds like Melvin Capital had taken greedily large short positions on GameStop, presenting an opportunity for investors to make big money if stocks rallied while hedge funds lost their jerseys. The House Financial Services Committee is hold a hearing Thursday on the whole r / WallStreetBets fiasco, with Gill scheduled to testify. Others programmed to speak include Robinhood co-founder Vlad Tenev, Reddit CEO and co-founder Steve Huffman, and Melvin Capital CEO Gabriel Plotkin.
In its prepared comments to the House, Gill claimed that his position as Director of Financial Wellness Education at MassMutual was not entirely related to his parallel work as a stock market commentator and that he had truly believed that GameStop had “the potential to reinvent itself as the ultimate destination for players within the thriving $ 200 billion gaming industry. ”Gill added that until a few months ago, in December 2020, his YouTube and Twitter accounts had only a few hundred followers each and he didn’t think he had the right ability to influence markets.
“The idea that I used social media to promote GameStop shares to unwitting investors is preposterous,” Gill wrote. “I made it very clear that my channel was for educational purposes only and that my aggressive style of investing was unlikely to be suitable for most of the people visiting 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’ve had a bit of experience and even I hardly understand these matters,” he wrote. “It is alarming how little we know about the inner workings of the market, and I am grateful that this Committee is examining what happened.”
Gill’s attorney, William Taylor, declined to comment to the Times, while MassMutual told the newspaper it is investigating the matter.