Keith Gill, aka “Roaring Kitty” on Twitter / YouTube and “DeepFuckingValue” on Reddit, is facing a proposed class action lawsuit for his role in the massive GameStop short squeeze 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 Washington state, Christian Iovin, who sold $ 200,000 in call options on GameStop stock when it was worth less than $ 100 a share. This turned out to be one very bad bet, since users on r / WallStreetBet have a organized effort to pump GameStop and other underperforming stocks, such as AMC and BlackBerry, with nostalgic value that eventually was quite successfulAs big Wall Street sharks quickly became detained in and joined In the Reddit-powered effort, shares in GameStop jumped to $ 483, spelling disaster for traders who short sell the company’s stock. Iovin was forced to buy back his calls at high rates, according to the lawsuit. GameStop is now at $ 46 a share, still significantly higher at the start of 2021 when it was trading in the $ 19 range.
Gill was one of the main proponents of the hustle and bustle on GameStop on his social media accounts according to CNBC, posted on Reddit that he made at least $ 7.8 million on the company’s stock. The lawsuit accuses him of not being a layman but a licensed stockbroker who intentionally manipulated the price of the company’s stock to get rich quick.
Gill’s deceptive and manipulative behavior not only violated many industry codes and regulations, but also violated several securities laws by undermining the integrity of the GameStop stock market, ”said Bloomberg. “He caused huge losses, not only to those who bought options contracts, but also to those who fell for Gill’s deed and bought GameStop stock during the market frenzy at tremendously high prices.”
According to the New York Times, the class action proposal mentions Gill’s multiple brokerage licenses, and also mentions it as the brokerage arm of MassMutual – where Gill worked until a few weeks ago, and which plaintiffs allege did not properly control its market activities. Times also noted that securities regulators in the state of Massachusetts are investigating whether its posts may violate the law or industry rules. (The Securities and Exchange Commission has vague threats to everyone involved in the speculative frenzy, including the stock trading app Robinhood, but didn’t actually run them.)
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Gill fights vigorously against claims that he was trying to manipulate the market to his own advantage. The short squeeze was only possible because hedge funds like Melvin Capital had eagerly taken large short positions on GameStop, which allowed investors to make a lot of money if stocks rose while hedge funds lost their shirts. The House Financial Services Committee is hold a hearing on Thursday over the entire r / WallStreetBets fiasco, with Gill scheduled to testify. Others intended to speak include Robinhood co-CEO Vlad Tenev, Reddit CEO and co-founder Steve Huffman, and Melvin Capital CEO Gabriel Plotkin.
In his prepared comments Gill claimed that his position as Director of Financial Wellness Education at MassMutual was totally unrelated to his side acting as a stock market commentator and that he had honestly believed GameStop “ had the potential to reinvent itself as the ultimate gamer destination within the thriving game industry of $ 200 billion. Gill added that just a few months ago, in December 2020, his YouTube and Twitter accounts had only a few hundred followers each and did not believe he was able to influence markets.
“The idea that I’ve used social media to promote GameStop stock to unwitting investors is ludicrous,” Gill wrote. “I was very clear that my channel was for educational purposes only and that my aggressive investing approach was probably not suitable for most people watching the channel. Whether other individual investors bought the shares was irrelevant to my thesis – my focus was on the fundamentals of the company. “
Gill added that “others will have to explain” what exactly happened with GameStop.
“Here’s the thing: I have a little bit of experience and even I barely understand these things,” he wrote. “It is alarming how little we know about the internal workings of the market, and I am grateful that this committee is investigating what has happened.”
Gill’s attorney, William Taylor, declined to comment to the Times, while MassMutual told the paper it is investigating the case.