Keith Gill Faces Securities Fraud Claims Amid GameStop Stock Volatility

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Keith Gill, the stock trader famous for his role in the 2021 GameStop short-squeeze, is now facing securities fraud claims in a class-action lawsuit.

The suit was filed on June 28 in the United States District Court for the Eastern District of New York. It alleges that Gill orchestrated a “pump and dump” scheme through a series of social media posts, causing GameStop stock prices to swing wildly between May and June.

The complaint, spearheaded by plaintiff Martin Radev and represented by the law firm Pomerantz, accuses Keith Gill of misleading his followers. Radev claims to have suffered financial losses after purchasing 25 shares of GameStop and three call options starting in mid-May, based on Gill’s social media activity.

A Weak Case

However, Eric Rosen, a former federal prosecutor and founding partner at Dynamis law firm, believes the lawsuit is likely “doomed” to fail. In a blog post dated June 30, Rosen argued that the complaint could easily be dismissed if Gill submits a well-crafted motion to dismiss. 

The legal expert pointed out that it is unreasonable to expect Gill to hold onto all his options until their expiry, and that no reasonable investor would base their investment decisions solely on social media posts from someone known as “Roaring Kitty.”

No Actionable Misinformation on Gill’s X Account

Rosen further contended that the plaintiff’s intention to profit from the price impact of Gill’s posts, rather than the content itself, weakens the case. He emphasized that proving securities fraud requires evidence of intentional deception or failure to disclose critical information.

Given the nature of Gill’s social media activity, which included random memes, Rosen believes it would be difficult to convince a judge that Gill’s posts constituted actionable misinformation.

Keith Gill Owns 6.6% of Chewy

In related news, Keith Gill recently disclosed a 6.6% ownership in Chewy, Inc. According to a June 24 SEC Schedule 13G filing, Gill owns 9,001,000 shares of Chewy’s Class A common stock. 

The SEC filing, which requires disclosure from investors holding more than 5% of a company’s shares, also included a humorous note from Gill, affirming, “I am not a cat.” This filing illustrates Gill’s unique blend of serious investing and playful online persona.

As the legal proceedings unfold, the outcome will undoubtedly be closely watched by both investors and regulators, given Gill’s significant influence on social media-driven market movements.

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