Keith Gill, a stock trader best known for the 2021 GameStop “short squeeze,” is facing securities fraud charges in a class action lawsuit over a series of recent social media posts that caused GameStop (GME) stock price fluctuated widely between May and June.

However, a former federal prosecutor believes the case is likely to “fail.”

Filed on June 28 in the Eastern District of New York, the complaint purports to sue Gill for orchestrating a “pump and dump” scheme through a series of social media posts beginning on June 13. 5.

Source: Courtlistener

The complaint alleges that Gill committed securities fraud by failing to fully disclose his purchases and sales of GameStop stock options, which allegedly deceived his followers and resulted in loss for some investors.

Represented by the law firm Pomerantz, plaintiff Martin Radev said he was injured by the alleged “pump and dump” scheme after purchasing a total of 25 GME shares and three stock options starting at mid-May.

Analysis of the return of Roaring Kitty

Gill reappeared after a two-year hiatus from social media on May 13, posting a series of mysterious memes to his X account, causing GameStop stock prices to increase 180%, from $17.46 to $48.75 by the end of trading day 14 May.

In a Reddit post on June 2, Gill disclosed a large position in GameStop, including 5 million GME shares and 120,000 GME call options with an expiration date of June 21, 2024.

This in turn caused GME price to surge, closing above $45 on the day.

By June 13, Gill shared that he had exercised all 120,000 of these call options, netting millions of dollars in profits. Notably, he used this profit to buy more GameStop shares.

The suit alleges that Gill failed to sufficiently disclose his intention to sell his call options beforehand, which deceived his followers and other market participants, leading to losses for investors. .

The complaint is likely to “fail,” according to the lawyer

In a June 30 blog post from former federal prosecutor Eric Rosen — a founding partner at the law firm Dynamis LLP — Rosen said the class action complaint “was doomed from the start” and could easily be dismissed if Gill files a “well-prepared motion to dismiss.”

Rosen argued that charging Gill with disclosing his intention to sell the options would not hold up in court, because no “reasonable person, let alone a reasonable investor,” would expect Gill to withhold all all of your options up to the exact time and expiration date.

Second, Rosen said that because the plaintiff was clearly seeking to profit from the price impact of Gill's posts on X, not from the actual content of his posts on X, it would be difficult to prove “Reasonable investor” status in court is based on this approach.

“It is unreasonable to buy securities just because an individual named Roaring Kitty posts harmless tweets on social media.” Rosen said the most important part of pursuing a fraud case is proving that the fraudster lied or intentionally deceived investors by failing to disclose important information.

He explained that it would be difficult to get past a judge, since the series of random memes posted by someone named “Roaring Kitty” on social media do not contain statements that may or may not be provable.


Source: https://tapchibitcoin.io/roaring-kitty-bi-kien-tap-the-voi-cao-buoc-gian-lan-va-thao-tung-chung-khoan-gamestop.html