Keith Gill, the Massachusetts financial educator turned basement YouTuber, became Reddit’s folk hero for his early investment in GameStop before a massive rise – and subsequent fall – in the company’s stock is being sued in a class action. lawsuit.
The lawsuit, filed in federal court in Massachusetts, alleges that Gill took on “the fake person of an amateur, run-of-the-mill dude who was just looking for the little guy” to recruit investors for the short squeeze, and thus was securities fraud .
Gill – who has more than 400,000 subscribers to his YouTube account, Roaring Kitty – was acting in his capacity as a stockbroker for Massachusetts Mutual, according to the lawsuit.
When a user named DeepFuckingValue posted his first post on Reddit’s r / WallStreetBets forum in September 2019, it didn’t make too much of a fuss on a message board where retailers often shared their strange stock bets and losses. “Holy shit bro, why did you drop 53K on game stop?” one user responded.
At the time, the video game store’s stock was trading at about $ 5 a share. Still, Gill, who then posted anonymously to the account, continued to share his updates; and Reddit retail investors, along with some hedge funds, soon jumped on the train. In January, $ GME stock traded at just under $ 500 a share, with Gill’s initial investment reaching a payout of a whopping $ 48 million, according to the lawsuit.
A message Gill wrote on January 27 about his highest payout, “is full of it [WallStreetBets] users share how Gill not only encouraged them to buy GameStop stock, but further inspired them to hold their stock in order to manipulate the market to insure a loss for those who had short positions, ”the lawsuit reads.
The lawsuit’s lead prosecutor, a Washington state man named Christian Iovin, “used about $ 200,000 in collateral to sell GameStop stock call option contracts when the stock fell below $ 100,” the lawsuit reads. Iovin and his attorney, Reed Kathrein, declined to comment on this article.
On his YouTube channel, where he offers “educational live streams in which I share my daily routine of tracking stocks and conducting investment research,” Gill repeatedly directed viewers to a possible short squeeze of GameStop stock, where investors buy a stock against which they bet heavily. Of the 80 videos on Gill’s channel, 56 refer to GameStop, the lawsuit says.
The lawsuit also names MassMutual, Gill’s former employer, as a defendant, alleging that the insurance company “had legal and regulatory obligations to monitor Gill to prevent this very behavior.”
According to The Wall Street Journal, Gill resigned from MassMutual on Jan. 28, the day after his highest payout, and the day before his first public interview, also with the log, was published.
Gill’s actions have also caught the attention of state and federal officials. William Galvin, the Commonwealth Secretary in Massachusetts, issued a subpoena against Gill earlier this month, with the aim of investigating whether his day job affected his trade, according to The New York Times
MassMutual told me Times that it knew nothing of Gill’s business until he handed in his resignation on Jan. 21, and would have asked him to stop if they had known. MassMutual did not immediately respond to a request for comment on this article.
Gill, along with the CEOs of Reddit and Robinhood, will testify at a congressional hearing on the stock’s surge hosted by Rep. Maxine Waters (D-CA), Chairman of the House Financial Services Committee.
In prepared remarks released Wednesday ahead of his congressional statement, Gill denied any wrongdoing.
“The idea that I’ve been using social media to promote GameStop stock to unwitting investors is ridiculous,” said Gill. “I was very clear that my channel was for educational purposes only and that my aggressive style of investing was probably not suitable for most of the people watching the channel.”
GameStop investors also filed a class-action lawsuit against the trading app Robinhood last month after it restricted trading to GameStop and other stocks popular on r / WallStreetBets, sending Redditors and app users into a meltdown.
You can read the lawsuit here.