Keith Gill, known by the pseudonym Roaring Kitty, purchased call options on GameStop shares before promoting the company on X and Reddit, actions that could be interpreted as market manipulation. This conclusion was reached by representatives of his broker, according to sources cited by WSJ.
At the end of May, some of the derivatives acquired by Gill reached maturity. Sources noted that Roaring Kitty might have profited from the expired contracts.
The broker E*Trade and its parent company, Morgan Stanley, are concerned that the analyst might use his influence to pump GME for personal gain.
Experts are debating whether recent social media posts constitute manipulation and are considering the option of removing Gill from the platform’s client list.
Company executives fear that such a move could create a negative atmosphere and prompt other users to close their accounts with E*Trade in solidarity. No decision has been made yet, and the firms may refrain from taking specific actions, the publication reports.
According to available information, Gill holds several securities licenses. The specialist obtained broker registration with Massachusetts Mutual Life Insurance. The publication learned that the Massachusetts Securities Division has initiated an investigation into Roaring Kitty’s activities.
WSJ sources also reported that the SEC is examining GameStop options trades during the period when Gill was posting on X. The regulator is considering whether to classify the transactions as manipulations but does not specify if the investigation specifically targets Roaring Kitty.
On May 13, three years later, Gill returned to activity on his X account with a series of cryptic posts that triggered a surge in stocks associated with him, AMC and GameStop.
In cryptocurrencies, a wave of hype unfolded around meme tokens linked to the expert on Solana. One trader managed to achieve a 32-fold profit on the KITTY pump within a day.
The heightened attention to Gill is due to his active participation in the 2020 “war” of retail traders against Wall Street.
On June 2, Roaring Kitty shared a screenshot of his investments in GameStop.
According to the post, he purchased 5 million GME for $115.7 million and invested $65.7 million in a call option, betting that by June 21, the securities would be worth at least $20. At that time, the analyst had earned over $9.3 million on a regular position but had a cash loss of $2.5 million on derivatives.
By the end of the regular session on June 3, GME shares had risen by 21% to $28. The opening was at $40, a 72.9% increase.
Following the WSJ news, the meme coin KITTY associated with Gill plummeted by 44.7%, according to CoinGecko. The decline in GME (-8%) was more moderate.
On May 29, KITTY and GME increased in value by 19% and 55% following a surge in GameStop stock prices.