As the furore surrounding Wallstreetbets and GameStop stock dies down, one of the major voices on the sub-Reddit that helped push GameStop stock to stratospheric heights now faces a lawsuit.
The lawsuit brought against Keith Gill, also known as Roaring Kitty, alleges that he is a licensed securities professional who manipulated the market for his own gain through his social media presence.
“Gill’s deceitful and manipulative conduct not only violated numerous industry regulations and rules, but also various securities laws by undermining the integrity of the market for GameStop shares,” reads an excerpt of the suit published by Bloomberg.
“He caused enormous losses not only to those who bought option contracts, but also to those who fell for Gill’s act and bought GameStop stock during the market frenzy at greatly inflated prices,” the suit continues.
The report from Bloomberg further reveals who has brought this suit.
The suit was filed by Hagens Berman Sobol Shapiro on behalf of Christian Iovin who reportedly sold $200 000 in call options on GameStop shares when the stock sat below $100. After Wallstreetbets had its fun, Iovin had to buy the calls back at elevated prices.
Interestingly, Gill is set to testify before the House Financial Services Committee as part of the committee’s examination into the recent activity surrounding GameStop.
“Hedge funds have a long history of predatory conduct and that conduct is entirely indefensible. Private funds preying on the pension funds of hard working Americans must be stopped. Private funds engaging in predatory short selling to the detriment of other investors must be stopped. Private funds engaging in vulture strategies that hurt workers must be stopped,” chairwoman of the committee, Maxine Waters said in January.
“Addressing that predatory and manipulative conduct is the responsibility of lawmakers and securities regulators who are charged with protecting investors and ensuring that our capital markets are fair, orderly, and efficient,” Waters added.
Ahead of his appearance on Wednesday, Gill released the statement he would give.
In that statement Gill describes how he has worked in the financial and investing sectors before finding himself without work. Using his knowledge of the stock market he invested his money and lived off of what he made. When he noticed GameStop shares were priced lower than he believed they ought to be, he invested.
His statement, which can be found in this report from Axios, explains why he felt GameStop was more valuable than the listed price.
“The idea that I used social media to promote GameStop stock to unwitting investors is preposterous. I was abundantly clear that my channel was for education purposes only, and that my aggressive style of investing was unlikely to be suitable for most folks checking out the channel. Whether other individual investors bought the stock was irrelevant to my thesis – my focus was on the fundamental of the business,” wrote Gill.
By his own account, Gill became a millionaire of off the back of his investment and it’s no surprise that he has drawn the attention of government and a class-action lawsuit.
[Image – CC 0 Pixabay]