Roaring Kitty, the man of the ‘meme stock mania’, is now accused of financial fraud in a class action, regarding the GameStop (GME) shares. The complaint sees him as the creator of a “pump&dump” scheme, and of deceiving his followers on social media.
Roaring Kitty and the class action on the “pump&dump” scheme with GameStop (GME) stocks
Roaring Kitty, whose real name is Keith Gill, has been sued in a new class action regarding the case involving GameStop (GME) stocks.
The accusation was filed on June 28 at the United States District Court for the Eastern District of New York.
In practice, Gill will have to face charges of financial fraud, and of having orchestrated a “pump and dump” scheme with a series of social media posts starting from May 13.
Specifically, Gill would be guilty of having deceived his followers, by inadequately disclosing the purchase and sale of his options on GameStop.
The law firm Pomerantz, which represents the plaintiff Martin Radev, stated that it was harmed by the alleged “pump and dump,” after purchasing 25 shares of GameStop and three call options starting from mid-May.
Yet, there are those like attorney Eric Rosen, who argue that the class action against Roaring Kitty is destined to fail:
@TheRoaringKitty was sued Friday night for securities fraud based on (ridiculous) allegations that he failed to disclose his intent to sell his call options to his Twitter and Reddit followers. Read our analysis below – we think the complaint is unlikely to succeed.…
— Eric Rosen (@ericrosenMAlaw) June 30, 2024
“@TheRoaringKitty was sued on Friday evening for financial fraud based on (ridiculous) accusations of not disclosing to his Twitter and Reddit followers the intention to sell his call options. Read our analysis below: we consider it unlikely that the complaint will succeed. https://dynamisllp.com/knowledge/roaring-kitty-sued-for-securities-fraud”
Roaring Kitty and his return on Twitter: the immediate effect on GameStop (GME) shares
It was mid-May, when Roaring Kitty returned with a tweet on X, after three years of absolute silence.
And indeed, the market has started to tremble again, causing an increase in the shares of GameStop (GME) by +74.4%, after already a surge of 110%.
Yet, his post on X did not have written words but only an image of a gamer leaning forward while sitting on the chair. Some interpreted this tweet as a player taking the game seriously.
In just 13 hours, Roaring Kitty’s tweet had already garnered 63,000 likes, confirming that the audience on the social network was giving him the attention he requested through other posts.
Keith Gill is a former marketer of Massachusetts Mutual Life Insurance who between 2020 and 2021 had attracted an army of day traders, inducing them to invest also in the call options of GameStop.
The continuous market follies
Even at the beginning of June, Roaring Kitty seems to have influenced the choices of investors, creating scenarios of pure madness in the traditional market.
And indeed, in a single day of trading, the price of GME stock rose by 47%. At that moment, the total cumulative gain since the end of May was over 100%.
First and foremost, an initial jump occurred following news about Roaring Kitty, causing the price of GME shares to rise from $23 to $40, only to fall back below $26 the next day.
And then again, on another day of the same week, GME exceeded $30, and then $46. At the time of writing, the GME stock is worth $24.5.
