Keith Gill, better known by his online aliases “Roaring Kitty” and “DeepF***ingValue,” has been sued for securities fraud in connection with his role in promoting GameStop (NYSE: GME). The lawsuit, filed by plaintiff Martin Radev in the United States District Court for the Eastern District of New York, alleges that Gill engaged in a “pump-and-dump” scheme to inflate the price of GameStop shares for personal gain.

According to the class action complaint, Radev and similarly situated plaintiffs claim that Gill used his extensive social media following to manipulate GameStop’s stock price between May 13, 2024, and June 13, 2024. Gill, a former financial analyst and registered stockbroker, allegedly made significant purchases of GameStop call options just before he began posting about the stock on social media for the first time in nearly three years.

Gill’s first tweet on May 12, 2024, after a long hiatus, featured a meme of a gamer in a suit, leaning forward in intense concentration. This cryptic image was widely interpreted by his followers and market analysts as a signal of his renewed interest in GameStop. The tweet quickly went viral, garnering over 28 million views and thousands of comments, reposts, and reactions. This single post was pivotal in sparking a rapid surge in GameStop’s stock price, as investors took it as a rallying cry to buy and hold the stock.

Gill is credited with igniting the original meme stock frenzy in January 2021, which saw GameStop shares surge dramatically as retail investors coordinated efforts on platforms like Reddit. This latest case suggests that Gill’s renewed activity in May 2024 had a similar impact, causing GameStop’s stock price to soar by 179% within days of his initial post on X (fka Twitter).

In a series of posts beginning May 12, 2024, Gill shared memes and videos that his followers interpreted as endorsements of GameStop stock. The market reacted swiftly, with GameStop’s share price rising from $17.46 on May 10 to $48.75 by May 14. Gill’s public declaration of his substantial holdings in GameStop on June 2, 2024, further fueled the stock’s volatility, resulting in another significant price increase.

The Wall Street Journal reported on June 3, 2024, that Gill’s activities had drawn the attention of E*Trade, Morgan Stanley, and regulatory bodies, including the Massachusetts securities division and the Securities and Exchange Commission (SEC). A Wall Street Journal article was cited in the suit that revealed Gill had purchased a large volume of GameStop options shortly before his May 12 post, raising concerns about potential market manipulation.

On the news of regulatory scrutiny, GameStop’s stock price fell 5.36% on June 4. Further revelations that Gill had sold his options by June 13 led to a 15.18% decline in GameStop’s stock over three days, causing significant losses for investors who had followed his lead.

The lawsuit accuses Gill of violating federal securities laws, specifically Sections 9(a), 9(f), 10(b), and 20A of the Securities Exchange Act of 1934, and Rule 10b-5(a) & (c). Radev seeks to recover damages for the losses suffered by himself and other investors who purchased GameStop securities during the class period, as well as prejudgment and post-judgment interest, attorneys’ fees, and other costs.

GameStop last traded at $24.69 on the NYSE.

Information for this story was found via the sources mentioned. The author has no securities or affiliations related to the organizations discussed. Not a recommendation to buy or sell. Always do additional research and consult a professional before purchasing a security. The author holds no licenses.