American financial analyst and investor Keith Gill, known more widely by his Twitter and YouTube handle Roaring Kitty and on Reddit as DeepFuckingValue, was hit with a class action securities fraud lawsuit late Friday. [Update: the lawsuit was voluntarily dismissed on Monday.]
Gill initially gained fame for his role in the GameStop (GME) stock surge in 2021, with his live streams and posts stirring up a community of retail investors. He went silent for three years, but set off a new wave of meme stock mania when he returned to Twitter in May.
The lawsuit, filed on June 28 in the U.S. District Court for the Eastern District of New York, alleges that Gill misled investors and potentially manipulated the market for personal gain between May 12 and June 13, 2024.
The complaint states that Gill can “rally a massive following of retail investors to purchase and hold GameStop securities through his social media posts.” It also argues that Gill used his social media posts to benefit his stock holdings.
Gill began sharing cryptic posts on his Twitter account on May 13 after a two-year hiatus. The posts, perceived as pro-GameStop sentiment, sparked a sharp rise in the company’s share price.
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By the close of business on May 14, GameStop shares spiked from $17.46 to $48.75. The pump in the share price caused short sellers to lose more than $1 billion.
“After being down -$862 million in mark-to-market losses yesterday, $GME shorts are down another -$1.36 billion in mark-to-market losses today,” said Ihor Dusaniwsky, S3 managing director of predictive analytics.
“Short interest is $1.92 billion, 63.2 million shares shorted, 23.68% SI % Float,” he added at the time. “We are seeing continued squeeze-related short covering due to the rebirth of the meme trade.”
The plaintiff, Martin Radev, says he purchased three options, two on May 13, 2024 (one sold on May 17), and one more on June 3, 2024.
After the initial GME price spike, Gill revealed on June 2 that he had bought a chunk of GameStop call options and stock. The announcement further buoyed the company’s share price, nearly doubling it.
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The online return of Keith Gill, also known as Roaring Kitty, is moving markets once again. The meme stock influencer, who rallied traders to bet big against Wall Street through GameStop in 2021, posted several positions in the video game retailer on Reddit this weekend. Pushing over $200 million in value, the purported exposure comprises shares and stock options. The news kicked retail traders into an apparent frenzy. GameStop shares rose more than 70% during pre-market trading to $39.69 on Mon...
The lawsuit, filed in the Massachusetts federal court, further alleges that Gill’s actions during the GameStop trading frenzy violated securities laws, resulting in substantial financial losses for many who followed his advice.
Gill is accused of misrepresenting his professional credentials, misleading investors about his expertise and motivations, failing to disclose his true motives, and potentially manipulating the market for personal gain.
He’s not commenting on the lawsuit directly, but the narrative around Gill could already be shifting to a new meme stock. On Monday he announced in an SEC filing that he has a 6.6% stake in Chewy Inc., sending its shares surging to a nearly a year high.
Edited by Stacy Elliott.
