GameStop investor retracts suit accusing Roaring Kitty of pump-and-dump scheme

GameStop investor retracts suit accusing Roaring Kitty of pump-and-dump scheme

Keith Gill—the meme stock influencer known as “Roaring Kitty” and “DeepF—Value” who has rallied millions on X and Reddit behind GameStop—briefly faced a lawsuit claiming that he knowingly deceived his loyal followers to reap millions of dollars in gains. The lawsuit was voluntarily dismissed by the plaintiff, Martin Radev, on July 1.

The proposed class action was filed Friday by Radev, a GameStop investor who accused Gill of a “pump-and-dump scheme” that allegedly artificially rose prices of GameStop securities between May 13 and June 13. As a result, perhaps thousands of investors were harmed, including Gill’s followers, Radev’s complaint alleged, while speculating on the class size. On Monday, Radev asked the court to dismiss the lawsuit without prejudice.

Radev’s complaint followed reports that E-Trade was considering banning Gill for suspected stock manipulation but reportedly feared backlash from Gill’s so-called meme stock army. According to the aggrieved investor, Gill’s scheme allegedly worked like this:

“Unknown to investors,” Gill “quietly purchased a large volume of GameStop call options on E-Trade at comparatively low prices.” He later “reignited the meme stock movement” he first sparked in 2021 by posting a meme on May 12 showing a gamer in a suit abruptly sitting up in his chair. This and subsequent meme posting—as well as sharing allegedly misleading insights into his GameStop portfolio—set off two spikes in trading that pumped up the value of GameStop securities. Then, on June 13, Gill “quietly sold” or “dumped” all “120,000 of his GameStop call options for a large profit” and only afterward informed investors and his “millions of his followers” of an increase in “his own stake in GameStop stock by over 4 million shares.”

Radev said that Gill should’ve made his stake known a month sooner to investors, who allegedly “suffered significant losses and damages” due to artificially raised prices.

Because Gill is “an American financial analyst and investor, as well as a former financial analyst for Massachusetts Mutual Life Insurance Company,” Radev alleged that Gill “also had actual knowledge of the misleading nature of the information he disseminated and/or circulated.” Otherwise, he allegedly “acted in reckless disregard of the true information known to him at the time” when his online posts were driving up GameStop stock by as much as 179 percent.

Radev claimed that Gill wielded his X account “as an artifice to deceive and trick investors.” Because Gill failed to disclose his large purchase of call options prior to his meme storm, Gill allegedly hid “what would have been his obvious intent in raising the prices of GameStop securities for his own benefit,” Radev alleged. This information would’ve dissuaded savvy investors from purchasing call options during Gill’s alleged scheme, Radev claimed.

Demanding that Gill be disgorged of any ill-gotten profits, Radev asked a jury to agree that Gill “circulated and disseminated materially false and misleading information” for the “purpose of inducing” Radev and others to purchase GameStop securities. He’s also seeking damages for all GameStop investors who purchased securities at allegedly unlawfully spiked prices during the month of Gill’s meme posting. But the lawsuit has since been closed, before any other plaintiff in the proposed class could join.

Neither Gill nor Radev’s legal team responded immediately to Ars’ request to comment.

This story was updated to reflect the lawsuit being voluntarily dismissed.

Source link

About The Author

Scroll to Top