Legal Concerns Don’t Dampen Keith Gill’s $GME Frenzy

Renowned retail investor Keith Gill (Roaring Kitty) faces regulatory scrutiny and concerns after a post about his GameStop ($GME) shares sent the stock price surging by 94.68% in under 24 hours.

After he posted on June 2 that he had purchased 5M $GME shares for $115.7M, $GME's price spiked from roughly $23 to $45.

Gill's latest $GME update on June 6 highlighted that he had made over $382M in $GME stocks in four days, bringing the total value to over $586M.

Gill's huge social media following (1.4M on X alone) raises concerns: Should he be allowed to post freely about his investments? Others believe his actions are market manipulation for financial gain.

As social media influence grows, conversations arise about content ethics. Should high-follower social media influencers be restricted in what they can and cannot post? Should they be held accountable for the consequences of their posts?

With over 5.07B social media users, freedom of speech has never been so dynamic.

Keith Gill's $GME Posts - Free Speech or Market Manipulation?

Bill Gavin, the Massachusetts Secretary of State and the state's top securities regulator is reportedly investigating Gill's trading activities, which has caused arguments on X.

BREAKING: The Massachusetts securities regulator is probing the trading activities of Roaring Kitty.

We have caught dozens of suspicious stock trades by politicians, and none of them have been investigated.

Just a few: pic.twitter.com/gR9nHIgzil

- Quiver Quantitative (@QuiverQuant) June 4, 2024

Highlighting issues behind his online engagements, Keith Gill first faced examination by the Secretary of State in 2021. Broker-dealer MML Investors Service, LLC - a MassMutual subsidiary - filed a preliminary statement about the trader's online GameStop-related trading posts while he worked for the company.

However, MassMutual was fined $4.7M as a result, for neglecting to oversee employees - among them Gill - whose posts at the time are said to have aided $GME shares surge by 2,000%.

In a recent interview, Former SEC Chairman Jay Clayton, challenged the ethics of Gill's social media activity, suggesting it may qualify as market manipulation - despite not falling under insider trading regulations.'

He's trading on his information, so it's not insider trading. But is this something we should be tolerating in our markets?' said Clayton. Whether it's legal, really, I don't think so.'

According to the Wall Street Journal, lawyers say it's improbable that the Securities and Exchange Commission (SEC) can sue Gill for market manipulation and that there is nothing clearly deceptive about Gill's tweeting of cryptic memes or revealing the size of his GameStop position.'

What he's doing is exploiting a gap in the rules,' commented Daniel Hawke, a partner at the law firm Arnold & Porter Kaye Scholer and former head of the SEC's market abuse unit.

He is using his celebrity and influence to draw people to buy the stock. The rules that exist do not permit the SEC to prosecute that conduct unless there is an element of deception.'

Other market observers disagree: This is obviously market manipulation. I can't believe we're even having this conversation,' said Matt Stoller, director of research at the American Economic Liberties Project to the Wall Street Journal.

Conversely, Defense attorney Lisa Braganca believes that buying a 20% stake in a company and divulging it is just disclosure' and that it's important to inform other investors of your selling intentions so the market can absorb the information and to bypass regulatory scrutiny.

E-Trade and Robinhood Stir Double Standards Debate

Following this controversy, Morgan Stanley trading platform E-Trade is reportedly considering booting Gill off its platform amidst issues of potential stock manipulation.

Investors commenting on the potential ban highlight how Wall Street elites are protected from the repercussions of their actions.

E-Trade wanting to ban Roaring Kitty for trading GameStop is one of the most bullshit things that I have heard in a long time.

Wall Street pump stocks on CNBC and Members of Congress trade on inside information, but they don't ban them.

They hate the little guy winning.

- Matt Allen (@investmattallen) June 3, 2024

Amid the GameStop price surge, Robinhood also restricted purchases of $GME on Monday. Although the platform only makes whole share orders available for a limited number of securities during after hours, questions arose regarding the rationale behind its actions.

During after-hours trading, Robinhood capped $GME purchases at 20% above or below its price of $22.99. However, many users on X reported being completely blocked from buying $GME from the platform.

ROBINHOOD $HOOD already blocking $GME buys after hours!!!! pic.twitter.com/x2SUUgh0ij

- SexyStockSlayer (@SexyStockSlayer) June 3, 2024

Keith Gill is Not to be Deterred

Uncertainties and debates have not deterred Keith Gill's social media stance and GameStop's shares.

Gill has potentially fueled another upturn in the video game retailer by announcing his return to YouTube after a three-year absence. 809K+ individuals have subscribed to watch the video, which is set to go live in less than 3 hours.

The YouTube video's caption warns: I don't provide personal investment advice or stock recommendations during the stream. Please understand that my style of investing is extremely aggressive and I take on a substantial amount of risk.'

Still, $GME's price has spiked by $47.45 over the past day following the announcement, bringing its current price to $62.45, per TradingView.

Since Gill initially posted about his GameStop investment on Monday, $GME's price has soared by 106.16%.

In Conclusion

Keith Gill's alleged GameStop influence is plausible. His investment strategies, which he spotlights via his online persona, attract attention from traders seeking guidance and regulatory bodies wanting to scrutinize his actions.

Opinions surrounding his social media and investment strategies are widely diverse. Some perceive his activities as market manipulation, while others argue that he has the right to share his investments freely.

In the whirlwind of regulatory scrutiny and online debates, one thing is clear: there is a need for clarity regarding the role of social media influence in the financial markets.

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