Roaring Kitty Sued for Alleged ‘Pump and Dump’ of GME

Keith Gill, also known as Roaring Kitty, is facing a class-action lawsuit for allegedly running a "pump and dump" scheme for Gamestop stock. The lawsuit claims that Gill's posts led to significant volatility in GameStop stock prices between May and June.

The lawsuit alleges that Gill manipulated GameStop’s stock price for personal gain. It claims that Gill began purchasing GameStop call options on May 12, 2024, at low prices. The next day, he posted on X (formerly Twitter) for the first time in nearly three years, which boosted the stock’s value.

Impact of Social Media Posts

Gill’s return to social media began on May 13, with a series of cryptic memes on his X account. This sparked a 180% surge in GameStop shares, which jumped from $17.46 to $48.75 by the end of trading on May 14. On June 2, Gill disclosed a large position in GameStop, sending the stock price soaring again.

By June 13, Gill had exercised all 120,000 call options, netting significant profits. He used these gains to increase his stake in GameStop by over 4 million shares. This disclosure caused GameStop’s stock price to surge, closing above $45 that day. 

Plaintiff’s Claims

Plaintiff Martin Radev claims he suffered financial losses due to Gill’s alleged manipulation. Radev purchased 25 shares of GME and three call options in mid-May, influenced by Gill’s posts. 

The lawsuit accuses Gill of failing to disclose his intent to sell his options, misleading investors, and causing them financial harm.

Legal Expert’s Perspective

Former federal prosecutor Eric Rosen, now a partner at Dynamis law firm, believes the lawsuit is likely “doomed” to fail. In a blog post on June 30, Rosen stated that the class-action complaint could be easily dismissed if Gill files a “well-crafted” motion to dismiss. 

Rosen argued that no reasonable investor would expect Gill to hold onto all his options until their exact expiry date, claiming that Gill should have disclosed his intent to sell untenable in court.