Keith Gill, known as "Roaring Kitty," is on the verge of becoming the first GME billionaire, thanks to a significant surge in the stock's value. This rise has simultaneously caused substantial losses for short sellers.
Amidst these events, popular financial commentator Jim Cramer has expressed support for Gill, emphasizing the legality of his trading actions while cautioning against potential market manipulation. As the SEC's stance remains uncertain, the situation continues to unfold with significant implications for traders and the broader market.
E-Trade Considering Removing 'Roaring Kitty' Keith Gill Amidst Concerns of Stock Manipulation
E-Trade is reportedly contemplating removing Keith Gill, famously known as "Roaring Kitty," from its platform. This consideration arises amidst concerns about potential stock manipulation, particularly involving GameStop (GME) shares. The Wall Street Journal reported on Jun. 3 that Gill’s recent trading activities and social media posts have raised alarms at E-Trade and its parent company, Morgan Stanley.
Keith Gill’s Return and GME Surge
Last month, Gill made a sudden return to X, formerly known as Twitter, which coincided with a significant surge in GameStop shares. Before this return, Gill purchased a substantial amount of GME options on E-Trade, some of which expired within that week, likely yielding him a profit. The Wall Street Journal, citing individuals familiar with the matter, reported that this sequence of events has led to concerns that Gill could be using his influence to manipulate GME stock prices for personal gain.
Debating Potential Manipulation
Morgan Stanley and E-Trade are currently evaluating whether Gill’s recent posts on X and Reddit could be interpreted as manipulative behavior. There is an internal debate on the potential implications of removing Gill from the platform. While there is a fear of negative backlash and the possibility of other traders closing their E-Trade accounts in solidarity with Gill, the firms are weighing the risks of his continued presence.
Regulatory Scrutiny
On May 13, Gill resumed his activity on X after a three-year hiatus, triggering a rally in meme stocks and cryptocurrencies. This activity intensified when, on Jun. 2, he posted on Reddit for the first time since 2021, sharing a screenshot indicating he held $181.4 million worth of GME stock and call options, with a bet that GME would reach at least $20 per share by Jun. 21.
Following Gill’s post, GME shares surged over 19% in Sunday night trading and closed up 21% at $28 on Jun. 3, eventually climbing nearly 8.5% in after-hours trading to $30.36. Despite closing below its $40 opening on Jun. 3, GME still outperformed its May 31 close of $23.14, marking a significant uptick driven by Gill’s posts.
Financial Gains and Public Posts
Gill’s financial disclosures continued on Jun. 3 with another Reddit post under his well-known DeepFuckingValue account. He claimed a $33.6 million gain on his 5 million GME shares and a $51.8 million gain on his options. These posts have only fueled the debate over whether his social media influence constitutes market manipulation.
Regulatory Investigations
Gill, who holds several securities-industry licenses and was previously a registered broker with Massachusetts Mutual Life Insurance, is under investigation by the Massachusetts Securities Division. A spokesperson for the division confirmed the ongoing scrutiny of Gill’s activities.
Additionally, sources told the Wall Street Journal that the Securities and Exchange Commission (SEC) is also reviewing GameStop call options trades in relation to Gill’s X posts. The SEC has internally discussed whether these trades could be considered manipulative, although it remains unclear if the agency is specifically targeting Gill.
The potential removal of Keith Gill from E-Trade’s platform shines a spotlight on the complex interplay between social media influence and stock market dynamics. As regulators and brokerage firms grapple with the implications of individual traders wielding significant sway over stock prices, the outcome of this situation could set a precedent for how such cases are handled in the future.
For now, the trading community remains on edge, awaiting further developments in what has become a closely watched saga of market influence, regulatory scrutiny, and the power of social media in the world of finance.
Keith Gill Poised to Become First GameStop Billionaire Amidst Massive Stock Rally
Meanwhile, Gill is on the verge of becoming the first billionaire from trading GameStop (GME) stock. As the GME rally continues to surge, Gill's position has swelled, with gains surpassing $300 million. This development comes while short sellers are experiencing significant losses, further highlighting the volatile nature of the stock.
The Meteoric Rise of GameStop
A recent post by The Kobeissi Letter on Jun. 3 suggested that Gill could reach billionaire status this week, stating:
“Roaring Kitty is currently up over $300 million in his $GME position. The stock has now added $5 BILLION of market cap today alone. He could become a billionaire this week.”
This prediction aligns with the 74% surge in GME stock price during pre-market trading on Monday, as reported by Google Finance. In the past five days, GME stock has risen over 25% and more than 40.5% in the past month.
Short Sellers in Distress
As GME continues its upward trajectory, short sellers are facing substantial losses. According to a May 30 post by financial data provider S3 Partners, GameStop short sellers have incurred month-to-month losses of approximately $1.4 billion. The Kobeissi Letter further highlighted on Jun. 3 that Citron Research is among the latest firms to announce a short position on GME. The post stated:
“Citron Research was the latest short seller to announce a short position. On May 16th, Citron announced that they are short $GME again. In 2021, Citron lost over $100 million shorting $GME.”
Citron Research had previously suffered significant losses during the initial GameStop short squeeze in January 2021, which saw GME stock soar over 1,000% within a month. This historic event, driven by retail investors rallying behind Gill, forced Citron and other short sellers to close out their positions at considerable losses.
Charting the GME Surge
Google Finance data illustrates the dramatic rise in GME stock. The one-day chart of GME/USD on Jun. 3 showed a significant uptick, with a related one-month chart depicting a consistent upward trend.
As Gill's influence continues to ripple through the market, the ongoing surge in GameStop stock could solidify his status as a billionaire. However, the situation remains fluid, with short sellers grappling with mounting losses and regulatory bodies closely monitoring the unfolding events.
The potential milestone for Gill is a strong indication of the power of individual traders in today's financial landscape and the profound impact of social media on stock market dynamics. As investors and analysts watch closely, the next few days will be critical in determining the future trajectory of GameStop and the fate of those betting against it.
In the meantime, the trading community remains abuzz with speculation and anticipation, keenly observing whether "Roaring Kitty" will indeed achieve billionaire status, making history once again in the world of finance.
Jim Cramer Backs Keith Gill Amid Potential SEC Investigation in Ongoing GameStop Saga
In a related development, prominent financial commentator Jim Cramer has voiced his support for Gill amidst the speculation of a potential investigation by the Securities and Exchange Commission (SEC).
Jim Cramer's Support for Keith Gill
Speaking on the legality of Gill's actions, Cramer emphasized that buying call options and disclosing them publicly is not inherently wrong. "There is no wrongdoing in buying calls and disclosing them," Cramer stated, highlighting that transparency in trading activities is not a violation of securities laws. However, he cautioned against making unsubstantiated claims or engaging in activities that could be perceived as boosting stock prices, as these actions could attract the scrutiny of the SEC.
The SEC's Authority and Potential Investigation
The SEC has the authority to investigate and sanction individuals for potential market manipulation or violations of securities laws. Although the regulator has not formally addressed Gill's recent actions, the possibility of regulatory intervention looms large.
This concern is particularly relevant given Gill's past regulatory run-ins. His previous employer, Massachusetts Mutual Life Insurance Company (MassMutual), was fined $4 million for inadequate supervision of Gill's trading activities. Despite this, Gill has consistently maintained his innocence, asserting that he did not solicit trades for personal gain.
Social Media Speculation and Regulatory Ramifications
The discussion on social media regarding Gill's potential legal troubles brings attention to the public's heightened awareness and interest in regulatory actions under the current SEC administration. The regulator's stance on market manipulation and securities law violations remains a critical factor in determining the outcome of this situation. If the SEC were to investigate Gill's recent trading activities, the ramifications could be significant, potentially setting a precedent for how similar cases are handled in the future.
Historical Context and MassMutual's Fine
Gill's history with regulatory scrutiny is well-documented. MassMutual's $4 million fine was a direct result of inadequate oversight of Gill's trading activities while he was employed there. This incident has cast a long shadow over Gill's trading career, with regulatory suspicion persisting despite his claims of innocence. The fine was imposed after it was revealed that MassMutual had failed to adequately supervise Gill's activities, which included trading in his personal account while he was employed as a financial advisor.
The Broader Implications for the Trading Community
The potential investigation into Gill's actions highlights the broader implications for the trading community. It raises important questions about the role of individual traders in influencing stock prices and the responsibilities they bear in ensuring their activities do not constitute market manipulation.
As the GameStop saga continues to unfold, the spotlight remains firmly on Keith Gill and the potential regulatory scrutiny he may face. Jim Cramer's backing provides a measure of support for Gill, emphasizing the legality of transparent trading activities. However, the specter of an SEC investigation looms large, with the potential to significantly impact Gill's future in the trading world and set a precedent for how similar cases are handled moving forward. The trading community, regulators, and the public alike are watching closely as this high-stakes drama continues to evolve, with the outcome poised to have far-reaching implications for all involved.
