Keith Gill, also known as “Roaring Kitty,” is currently facing securities fraud claims in connection to the 2021 GameStop frenzy. The class-action lawsuit filed against him on June 28 in the Eastern District of New York accuses Gill of engaging in a “pump and dump” scheme through his social media posts. The complaint alleges that Gill used his social media influence to manipulate GameStop’s stock price for personal gain, causing wild fluctuations in the stock prices between May and June 2024.
According to the filing, Gill started purchasing GameStop call options on E*Trade on May 12, 2024, at low prices. His social media posts on platforms like X and Reddit led to a surge in interest in GameStop, influencing the stock’s value. By June 2, 2024, Gill disclosed his holdings in GameStop securities, including 120,000 call options and 5 million shares of stock. This disclosure further boosted GameStop’s stock price, reaching above $45 by the end of the day. Subsequently, Gill exercised all 120,000 call options, netting profits that he used to increase his stake in GameStop by over 4 million shares.
Plaintiff Martin Radev claims that he suffered financial losses as a result of Gill’s alleged manipulation. Radev purchased 25 shares of GME and three call options in mid-May, influenced by Gill’s posts. The lawsuit accuses Gill of failing to disclose his intent to sell his options, misleading investors, and causing them financial harm.
Despite the allegations, not all legal experts believe the lawsuit holds merit. Former federal prosecutor Eric Rosen argued in a blog post on June 30 that the class-action complaint is “doomed from its inception.” Rosen suggested that Gill could easily dismiss the case with a well-crafted motion. He explained that the expectation for Gill to disclose his intent to sell his options is unreasonable, as it is not something a reasonable investor would necessarily consider when making investment decisions.
Rosen emphasized that proving securities fraud requires demonstrating that the accused intentionally misled investors by failing to disclose critical information. He pointed out that the plaintiff’s claim rests on the assumption that Gill’s social media posts directly influenced their investment decisions, which would be challenging to prove in court. Rosen further argued that the random memes posted by “Roaring Kitty” on social media do not inherently constitute claims that can be definitively proven or disproven.
The case against Keith Gill raises important questions about the influence of social media on stock prices and investor behavior. While the allegations of securities fraud are serious, the burden of proof lies in establishing a direct link between Gill’s actions and the financial losses incurred by investors. As the legal proceedings unfold, it will be interesting to see how this case shapes the ongoing debate surrounding the intersection of social media, stock trading, and securities regulation.
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