Reddit User DeepF–kingValue, Known on YouTube as Roaring Kitty, Hit With GameStop Class Action Lawsuit – The Daily Beast

Keith Gill, the Massachusetts financial educator turned basement YouTuber turned Reddit folk hero for his early investment in GameStop before a massive surge—and subsequent drop—in the company’s stock, is being sued in a class-action suit.

The suit, filed in federal court in Massachusetts, alleges that Gill “took on the fake persona of an amateur, everyday fellow, who simply was looking out for the little guy” in order to recruit investors to the short squeeze, thus constituting securities fraud.

Gill—who has over 400,000 subscribers on his YouTube account, Roaring Kitty—was acting in his capacity as a securities broker for Massachusetts Mutual, according to the lawsuit.

When a user named DeepFuckingValue made their first post on Reddit’s r/WallStreetBets forum in September 2019, it didn’t make too many waves on a message board where retail traders frequently share their strange stock bets and losses. “Holy shit bro, what made you drop 53K on gamestop?” one user commented.

At that point, the video game store’s stock was trading at about $5 a share. Yet Gill, then posting anonymously on the account, kept sharing his updates; and Reddit retail investors, along with some hedge funds, soon jumped on the train. By January, $GME stock was trading at just under $500 a share, with Gill’s initial investment reaching a payout of as much as $48 million, according to the lawsuit.

A post Gill wrote on Jan. 27 about his peak payout, “is replete with [WallStreetBets] users’ recounting how Gill encouraged them not only to buy GameStop shares, but further inspired them to hold their shares so as to manipulate the market into ensuring a loss for those holding short positions,” the lawsuit reads.

The lead plaintiff of the lawsuit, a Washington state man named Christian Iovin, “used approximately $200,000 in collateral to sell call option contracts for GameStop shares when the stock was below $100,” the suit reads. Iovin and his attorney, Reed Kathrein, declined to comment for this article.

On his YouTube channel, where he offers “educational live streams where I share my daily routine of tracking stocks and performing investment research,” Gill repeatedly directed viewers to a potential short squeeze of GameStop stock, where investors purchase a stock being heavily bet against. Of the 80 videos on Gill’s channel, 56 reference GameStop, the lawsuit reads.

The lawsuit also names MassMutual, Gill’s former employer, as a defendant, alleging that the insurance company had “legal and regulatory obligations to supervise Gill to prevent this very conduct.”

According to The Wall Street Journal, Gill resigned from his job at MassMutual on Jan. 28, the day after his peak payout, and the day before his first public interview, also with the Journal, was published.

Gill’s actions have drawn attention from state and federal officials, as well. William Galvin, Massachusetts’ secretary of the commonwealth, issued a subpoena against Gill earlier this month, with the goal of investigating whether his day job affected his trading, according to The New York Times.

MassMutual told the Times that it didn’t know about Gill’s trading until he submitted his resignation on Jan. 21, and would have asked him to stop, had they known. MassMutual did not immediately respond to a request for comment on this article.

Gill is due to testify on Thursday, along with the CEOs of Reddit and Robinhood, at a congressional hearing on the stock surge organized by Rep. Maxine Waters (D-CA), chair of the House Financial Services Committee.

In prepared remarks released Wednesday ahead of his congressional testimony, Gill denied any wrongdoing.

“The idea that I used social media to promote GameStop stock to unwitting investors is preposterous,” Gill’s remarks read. “I was abundantly clear that my channel was for educational purposes only, and that my aggressive style of investing was unlikely to be suitable for most folks checking out the channel.”

GameStop investors also filed a class-action lawsuit against trading app Robinhood last month after it restricted trades to GameStop and other stocks popular on r/WallStreetBets, sending Redditors and app users into a meltdown.

You can read the lawsuit here.

Sorgente articolo:
Reddit User DeepF–kingValue, Known on YouTube as Roaring Kitty, Hit With GameStop Class Action Lawsuit – The Daily Beast

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