Roaring Kitty faces new lawsuit over alleged GameStop pump-and-dump scheme

Keith Gill, the “Roaring Kitty,” is the subject of a class-action lawsuit for his alleged involvement in a scam related to his social media posts regarding GameStop. The trial, deposit on June 28 in the Eastern District of New York, claims Gill manipulated GameStop's stock price through his influential online presence between May and June.

The plaintiff accuses Gill of engaging in a “pump-and-dump” scheme by quietly purchasing a large volume of GameStop call options before his May 12 meme post, which marked his return after three years.

The post was widely interpreted as a renewed interest in GameStop, causing the stock price to surge by over 74% the following day. Meanwhile, Solana-based memecoins also saw a 500% surge shortly after Gill’s social media comeback.

On June 2, Gill returned with a Reddit post revealing his significant stake in GameStop, including 5 million shares and 120,000 call options. According to the complaint, the post caused GameStop’s stock price to surge more than 70% in premarket trading the next day.

The filing also cited a Wall Street Journal report that Gill had purchased a large volume of GameStop options shortly before its May release, raising concerns about possible stock manipulation.

Gill revealed that he exercised all 120,000 call options and increased his holdings of GameStop stock to over 9 million shares. This caused GameStop's stock price to drop 15.18% over the next three trading sessions.

As a result of Gill's actions, the plaintiff and other class members said they suffered significant financial losses due to the sharp decline in the market value of GameStop securities.

They said Gill's market manipulation through his social media influence violated federal securities laws. The lawsuit seeks damages for losses.

“The complaint is probably doomed to failure”

Despite the new allegations, Eric Rosen, a former federal prosecutor and founding partner of Dynamis LLP, expressed skepticism that the trial will succeed, judging it risks failing.

Rosen pointed out three weaknesses in the case, which will likely be dismissed. He said that since Gill's options had an expiration date, it was no secret that he would eventually sell them.

Additionally, Gill’s tweets did not constitute investment advice. According to Rosen, reasonable investors would not base their decisions solely on his tweets. Additionally, Gill was not a financial advisor and was not required to disclose his trading intentions.

“Typically, only financial advisors or fiduciaries have to disclose their positions or intentions or things like that. Roaring Kitty is neither. That, too, will be a hurdle that plaintiffs will have to overcome, and it will be difficult for them to do so,” Rosen noted.