According to Odaily, Keith Gill, a stock trader known for his role in the GameStop short squeeze in 2021, is facing securities fraud allegations in a class-action lawsuit due to a series of social media posts that caused dramatic fluctuations in GameStop (GME) stock prices between May and June. However, a former federal prosecutor believes that the lawsuit is likely to fail.
The lawsuit was filed in the Eastern District of New York on June 28, accusing Gill of orchestrating a 'pump and dump' scheme through social media since May 13. It alleges that Gill failed to fully disclose his GameStop options trading situation, misleading followers and causing investor losses. The plaintiff, Martin Radev, claims to have been harmed by the 'pump and dump' behavior.
Gill ended a two-year social media silence on May 13, posting messages that triggered a surge in stock prices. On June 2, he disclosed a large number of holdings on Reddit, pushing the stock price up again, and revealed that he had exercised all bullish options to realize millions of dollars in profits. The complaint accuses Gill of failing to disclose his intention to sell options in advance, misleading the market and causing investor losses.
However, Eric Rosen, a former federal prosecutor and founding partner of Dynamis LLP law firm, believes that the lawsuit was doomed to fail from the start. He argues that the accusation that Gill should have disclosed his intention to sell options cannot stand in court, and the plaintiff is merely trying to profit from the impact of Gill's posts on prices, rather than the content of the posts. Rosen states that to prove fraud, it must be shown that the fraudster has completely lied or deliberately concealed important information, and Gill's social media posts do not contain statements that can be proven or refuted.
