Trades popular with retail investors who congregate in groups like WallStreetBets on Reddit are starting to turn.
Keith Gill, one of the most influential voices that pushed GameStop on the WallStreetBets Reddit forum, was hit with a lawsuit that accused him of misrepresenting himself as an amateur investor and profiting by artificially inflating the price of the stock.
The proposed class action against Gill, who adopted the online nickname “Roaring Kitty,” was filed Tuesday in federal court in Massachusetts. The suit said Gill was actually a licensed securities professional who manipulated the market to profit himself. Gill touted GameStop shares through an extensive social media presence on Youtube, Twitter and Reddit.
“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,” the suit said. “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 lawsuit said Gill, who has been written about extensively by Bloomberg, The New York Times, The Wall Street Journal and others, was far from being an amateur stock picker. Rather, he is a Chartered Financial Analyst who holds multiple broker licenses and was previously employed by Massachusetts Mutual Life Insurance Co. The lawsuit also named Mass Mutual and a brokerage subsidiary of the company as defendants, saying they had an obligation to supervise Gill’s activities in the market.
“In order to motivate amateur traders, Gill fashioned himself as a kind of Robin Hood and characterized securities professionals as villians,” the lawsuit said. “Gill, however, is no amateur. For many years, he actively worked as a professional in the investment and financial industries.”
The would-be plaintiff representing investors in the case, Christian Iovin of Washington state, sold $200,000 worth of call options on GameStop shares when the stock was below $100. The stock quickly eclipsed $400 a share, forcing him to buy the calls back at elevated prices.