Roaring Kitty is in the headlines nowadays, on June 28 Keith Gill faced a class-action lawsuit for his social media posts regarding GME. Moreover, according to the latest Reuters reports, the former federal prosecutor's prediction over the lawsuit became true as the investors have withdrawn their lawsuit against Keith Gill aka "Roaring Kitty.
The class action, which accused Gill of securities fraud, was filed last Friday in Brooklyn, New York, federal court but was voluntarily withdrawn on Monday without any given reason. The lawsuit can still be refiled, according to court documents.
Represented by the Pomerantz law firm, the investors, led by Martin Radev from Las Vegas, alleged that Gill manipulated GameStop securities between May 13 and June 13.
They claimed that Gill's covert accumulation of large quantities of GameStop stock and call options, followed by the strategic sale of some holdings after a three-year social media hiatus, constituted a "pump-and-dump" scheme. This activity allegedly resulted in volatile stock price fluctuations, enabling Gill to profit "millions of dollars" at the expense of other investors.
On May 12, Gill posted a cryptic meme on the social media platform X, interpreted by many as a bullish signal for GameStop. The stock price surged over 180% in the following days, only to retract most of the gains by May 24.
On June 2, Gill disclosed his ownership of five million GameStop shares and 120,000 call options, and by June 13, he revealed that he had sold the call options while increasing his share count to nine million.
The lawsuit argues that Gill's lack of transparency regarding his trading intentions misled his followers and resulted in financial losses for some investors.
A former federal prosecutor, Eric Rosen, has expressed skepticism about the lawsuit's prospects. On June 30, Rosen stated that the complaint is likely "doomed from its inception." He argued that no reasonable investor would expect Gill to hold his call options until their expiration without any sales.
Rosen suggested that the plaintiff's case hinges on the market impact of Gill's social media posts rather than their actual content, making it difficult to prove in court.
"It is unreasonable to purchase securities simply because an individual named Roaring Kitty posted innocuous tweets on social media," Rosen noted. He emphasized that fraud cases require clear evidence of deceit or intentional misinformation, which he believes is lacking in this situation.
The withdrawal of the lawsuit against Keith Gill, albeit temporary, highlights the challenges in proving securities fraud based on social media influence. While the investors may refile their complaint, legal experts like Eric Rosen doubt its viability.
The case underscores the complexities of holding individuals accountable for market movements driven by online activities, especially in the context of the meme stock phenomenon.
As the legal proceedings unfold, the focus will likely remain on whether Gill's actions constituted genuine market manipulation or were merely part of the broader, unpredictable landscape of social media-driven trading.
Also Read: Roaring Kitty Faces Securities Fraud Claims Over GME
