Roaring Kitty Faces E*Trade Ban Over GameStop Manipulation

E-Trade is reportedly mulling over the possibility of suspending Keith Gill, a trader involved in the meme stock movement and popularly known as ‘Roaring Kitty’.

Morgan Stanley-owned brokerage is mulling this action given that Gill has recently made a big bet on GameStop shares and call options raising concerns of market manipulation.

Keith Gill’s GameStop Investments Spark Controversy

According to the Wall Street Journal, Keith Gill, who also goes by “DeepFuckingValue” on Reddit, posted a screenshot showing that he had a large number of investments in GameStop. The screenshot revealed that he controlled 5 million shares of GameStop and held 120,000 call options with a $20 strike price and expiry on June 21. 

BREAKING: E*Trade is considering kicking RoaringKitty, aka DeepFuckingValue, off the platform, as they are reportedly "growing concerned about potential stock manipulation around his recent purchases of GameStop, $GME," per WSJ.

— unusual_whales (@unusual_whales) June 3, 2024

Moreover, these options were reportedly bought for about $5.68 each. This announcement brought a boost to GameStop shares, which increased by around 30% in the beginning of Monday.

Morgan Stanley’s global financial crimes and compliance team, as well as its outside counsel, are closely observing Gill’s account behavior. The brokerage has not made a decision but is considering closing his account. E-Trade had no public statement to make, citing the company’s policy of not disclosing information on specific clients.

Meme Stock Mania and Legal Concerns

The recent hype of meme stock trading has once again brought Keith Gill into the limelight. His previous participation in the 2021 GameStop trading fiasco led to congressional hearings and numerous class-action lawsuits.

During that period, Gill was charged with posing as a novice trader while being a licensed financial expert. At the time, MassMutual had hired him to work in marketing and financial education.

The resurgence of meme stocks is due to Gill’s recent post on Reddit, which is his first post on the platform in three years. This post sparked the meme stock mania once again, which attracted more attention from regulators and financial establishments. Recent activities of Gill have created controversies and suspicions about the ethical and legal nature of his trading activities.

GameStop Shares Surge Amid Gill’s Return

GameStop’s stock experienced a notable increase following Gill’s disclosure, jumping by 30% early Monday and closing at $27.58 overnight trading.

This surge was fueled by retail traders reacting to Gill’s substantial investment. His portfolio, as shown in the screenshot, included 5 million GameStop shares valued at $115.7 million and call options worth $657 million. 

This spike in GameStop’s stock price mirrors the patterns observed during the 2021 meme stock frenzy, where stocks with weak fundamentals gained significant traction due to social media hype.

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