Keith Gill, famously known as Roaring Kitty, is facing securities fraud allegations in a class-action lawsuit over recent social media activity that significantly impacted GameStop stock prices between May and June. Despite the serious claims, a former federal prosecutor believes the lawsuit is likely to fail.
The lawsuit, filed on June 28 in the United States District Court for the Eastern District of New York, accuses Gill of a “pump and dump” scheme. Beginning May 13, Gill allegedly posted cryptic messages on social media to manipulate the stock price for personal profit.
According to the complaint, Gill did not adequately disclose his GameStop options trades, misleading his followers and causing investor losses. Martin Radev, the plaintiff represented by Pomerantz law firm, claims he was financially harmed after purchasing GameStop shares and options based on Gill’s posts.
Gill re-emerged on social media on May 13 after a two-year hiatus, posting memes on his X account. These posts caused GameStop shares to surge by 180%, from $17.46 to $48.75 by May 14. On June 2, Gill revealed on Reddit that he held five million GameStop shares and 120,000 call options expiring on June 21, further boosting the stock price.
By June 13, Gill announced he had exercised all his options, realizing millions in gains and purchasing more GameStop shares. The lawsuit alleges Gill misled followers by not disclosing his intent to sell the options, causing investor losses.
Former federal prosecutor Eric Rosen, now a partner at Dynamis law firm, described the lawsuit as “doomed from its inception.” Rosen argued that no reasonable investor would expect Gill to hold his options until their exact expiry date. He suggested the plaintiff aimed to profit from the stock’s price movements rather than any substantial claims Gill made.
Rosen emphasized that proving securities fraud requires showing intentional deception or significant omission of information. He doubted the lawsuit would succeed, as Gill’s random social media memes are not verifiable claims.
In conclusion, the case against Roaring Kitty faces significant legal hurdles, with experts doubting its chances of success.
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