Not directly related to this case, but Keith Gill (Roaring Kitty) has released his opening statement for the Congressional hearing tomorrow (PDF file):...
The surprising choice is the lead plaintiff. They picked someone who was short. Christian Iovin, sold calls and was short. Roaring Kitty bought calls and was long. Christian Iovin bet that Roaring...
“In order to motivate amateur traders, Gill fashioned himself as a kind of Robin Hood and characterized securities professionals as villians,” the lawsuit said. “Gill, however, is no amateur. For many years, he actively worked as a professional in the investment and financial industries.”
“Gill’s deceitful and manipulative conduct not only violated numerous industry regulations and rules, but also various securities laws by undermining the integrity of the market for GameStop shares,” the suit said. “He caused enormous losses not only to those who bought option contracts, but also to those who fell for Gill’s act and bought GameStop stock during the market frenzy at greatly inflated prices.”
The would-be plaintiff representing investors in the case, Christian Iovin of Washington state, sold $200,000 worth of call options on GameStop shares when the stock was below $100. The stock quickly eclipsed $400 a share, forcing him to buy the calls back at elevated prices.
The surprising choice is the lead plaintiff. They picked someone who was short. Christian Iovin, sold calls and was short. Roaring Kitty bought calls and was long. Christian Iovin bet that Roaring Kitty was wrong, got margin called, closed at a loss, and now is upset that he lost money.
They are saying Christian Iovin would not have bet against Roaring Kitty if he knew that Roaring Kitty wasn't just some schmuck on WSB, but was really a licensed professional?
OK, I read the complaint. So the securities fraud covers anyone who lost money on the way up, and anyone who lost money on the way down. Seems overly broad, but whatever. OK, so back when GME was...
OK, I read the complaint.
Gill fashioned himself as a kind of Robin Hood and characterized securities professionals as
villains. Gill slyly targeted large hedge funds who had shorted GameStop stock as the evil, powerful big boys. He incited a market frenzy by advocating revenge on the big hedge funds by buying GameStop shares to drive up the price and “squeeze” short sellers who would be forced to cover their short positions at greatly inflated prices. Because of Gill’s conduct, in a matter of days, the price of GameStop shares went up by more than 1,600% to a record $483 a share, causing huge losses for both short sellers and those who purchased GameStop shares at artificially inflated prices.
So the securities fraud covers anyone who lost money on the way up, and anyone who lost money on the way down. Seems overly broad, but whatever.
Gill posted an approximately hourlong video on July 27, 2020, titled “100%+ short interest in GameStop
stock (GME) – fundamental & technical deep value analysis.” In this video, Gill pushed investment in GameStop on his viewers and directed their attention to the possibility that GameStop shares were ripe for a “short squeeze.”
OK, so back when GME was $4, Gill's thesis was
this is undervalued (also a thesis shared by Michael Burry of The Big Short fame)
when this goes up it will continue to go up due to a short squeeze.
On January 22, 2021, the volume of GameStop shares traded reached an astonishing 196 million – the highest daily average in the history of the company. That same day, Gill uploaded a video “thanking” his viewers, titled, “GameStop closes at 65, up 1500% since July 2020. What a ride. Cheers, and thank you to everyone!” Gill has, at the time of filing this Class action Complaint, ceased uploading videos to his YouTube channel.
So Gill thanked everyone, and stopped streaming when GME was at $65. Seems reasonable, especially given GME is trading not much below that now.
Plaintiff sold call option contracts (representing 2,000 shares) at a strike price of $100 on January 26, 2021 with expiration date of January 19,2021, while Gill’s manipulative social media conduct drove
the market for GameStop shares into an unjustified frenzy (above $400). Plaintiff made these transactions relying on the integrity of the market for GameStop shares.
Not sure about those dates, but when GME was somewhere between $40-$100, the lead plaintiff decided Gill was wrong, the short squeeze was squoze and decided to short the stock.
Over the next several weeks, Gill continued to galvanize the WSB community. In a January 5, 2021, post detailing the value of his holdings, WSB users continued to say with increasing frequency that Gill was the catalyst for their purchase of GameStop shares:
So after Iovine shorted the stock, Gill posted screenshots of his holdings (plus cat pics on twitter), and it is Gill's fault that Iovine got squeezed?
So to summarize, Gill warned of a short squeeze, Iovine decides to short the stock anyway, Iovine got squeezed, and now Iovine is suing?
That has to be the worst lead plaintiff ever.
but the best part is this quote...
As Gill’s mother is quoted as saying, “He always liked money.”
He may have been the spark but I think Reddit admins and /r/wallstreetbet moderators deserve a lot more of the blame than this guy for basically pouring kerosene on the fire. Once it hit $100...
He may have been the spark but I think Reddit admins and /r/wallstreetbet moderators deserve a lot more of the blame than this guy for basically pouring kerosene on the fire. Once it hit $100 there should have been a constant sticky on that subreddit correcting some of the blatant misinformation and hype trains.
Does it detail his plan at all? I'm using firefox reader to bypass the paywall but I'm not sure I got the whole article. From what I read the lawsuit is basically "he's not an amateur therefore he...
Does it detail his plan at all? I'm using firefox reader to bypass the paywall but I'm not sure I got the whole article. From what I read the lawsuit is basically "he's not an amateur therefore he misled people." Are finance professionals required to disclose their status when offering unsolicited opinions on the stock market? I have no idea. I wouldn't be surprised if he does end up getting investigated but I don't think this lawsuit is it -- it seems like the last-ditch effort of someone who went broke selling naked calls:
The would-be plaintiff representing investors in the case, Christian Iovin of Washington state, sold $200,000 worth of call options on GameStop shares when the stock was below $100. The stock quickly eclipsed $400 a share, forcing him to buy the calls back at elevated prices.
From the complaint: As a licensed securities professional, including the period he was licensed by and associated with MML and MassMutual, Gill was obligated to follow various securities laws,...
From the complaint:
As a licensed securities professional, including the period he was
licensed by and associated with MML and MassMutual, Gill was
obligated to follow various securities laws, Securities and Exchange
Commission (“SEC”) rules and regulations, and FINRA rules. For
example, the FINRA rules applicable to Gill include:
a. Rule 2010 requires Gill to conduct his business in observance of
“high standards of commercial honor and just and equitable principles
of trade.”
b. Rule 2020 prohibits Gill from inducing “the purchase or sale of[] any
security by means of manipulative, deceptive or other fraudulent
device or contrivance.”
c. Rule 2111 requires Gill only to recommend a security that is suitable
for the recipient of the communication.
d. Rule 2210 requires that Gill’s communications with the public,
including on social media, (i) are based on principles of fair dealing and
good faith, must be fair and balanced, and must provide a sound basis
for evaluating the facts in regard to any particular security or type of
security, industry, or service, (ii) not omit any material fact or
qualification if the omission, in light of the context of the material
presented, would cause the communication to be misleading, (iii) not
contain any false, exaggerated, unwarranted, promissory, or
misleading statement or claim in any communication, (iv) be clear and
not misleading within the context in which they are made, and that
they provide balanced treatment of risks and potential benefits, (v)
must provide details and
5
Case 1:21-cv-10264 Document 1 Filed 02/16/21 Page 8 of 36
explanations appropriate to the audience to which the communication
is directed, (vi) must not bury material information in footnotes, and
(vii) must not include a prediction or forecast of future performance or
make exaggerated or unwarranted claims or forecasts.
e. Rule 3210 prohibits Gill from having accounts with brokerage firms
other than the firm with whom he is licensed without the permission of
the licensing firm.
I think Matt Levine made the point recently that this is allowed. GME short sellers did exactly that, being loud and clear why they thought GME was going to zero.
It's hard for me to take seriously the idea that the literal financial professional riling everyone up against financial professionals wasn't totally just trying to manipulate people for personal benefit.
I think Matt Levine made the point recently that this is allowed. GME short sellers did exactly that, being loud and clear why they thought GME was going to zero.
Good point, sorry for misunderstanding/ mischaracterizing your point of view. Roaring Kitty cashed out $10m early on, but then left $30-40m on the table. Hundreds of people were posting "If he...
Good point, sorry for misunderstanding/ mischaracterizing your point of view.
Roaring Kitty cashed out $10m early on, but then left $30-40m on the table.
Hundreds of people were posting "If he holds, I hold."
He seems to have been caught up in the hype himself.
BTW, the top WSB moderators were ultimately booted off Reddit.
This reminds so much of Kony2012. Where a small but well thought out 'idea' and 'action plan' is totally overwhelmed by the massive wave that Social Media can create.
This reminds so much of Kony2012. Where a small but well thought out 'idea' and 'action plan' is totally overwhelmed by the massive wave that Social Media can create.
What is it that makes you sure he was in it for the pump and dump rather than a belief in the fundamentals? I ask that as an honest question - it's something I've been following at arm's length,...
What is it that makes you sure he was in it for the pump and dump rather than a belief in the fundamentals? I ask that as an honest question - it's something I've been following at arm's length, at best, but I haven't seen anything to indicate that he wasn't sincere, even if others were taking advantage.
That said, I'm a sucker for a good David and Goliath story and I've just read the statement that @Deimos linked further down, so it's fair to say I'm inclined in his favour right now - perhaps unjustly so, I don't know.
Not directly related to this case, but Keith Gill (Roaring Kitty) has released his opening statement for the Congressional hearing tomorrow (PDF file): https://docs.house.gov/meetings/BA/BA00/20210218/111207/HHRG-117-BA00-Wstate-GillK-20210218.pdf
I love that he closed with 'I like the stock.'
The surprising choice is the lead plaintiff. They picked someone who was short. Christian Iovin, sold calls and was short. Roaring Kitty bought calls and was long. Christian Iovin bet that Roaring Kitty was wrong, got margin called, closed at a loss, and now is upset that he lost money.
They are saying Christian Iovin would not have bet against Roaring Kitty if he knew that Roaring Kitty wasn't just some schmuck on WSB, but was really a licensed professional?
OK, I read the complaint.
So the securities fraud covers anyone who lost money on the way up, and anyone who lost money on the way down. Seems overly broad, but whatever.
OK, so back when GME was $4, Gill's thesis was
this is undervalued (also a thesis shared by Michael Burry of The Big Short fame)
when this goes up it will continue to go up due to a short squeeze.
So Gill thanked everyone, and stopped streaming when GME was at $65. Seems reasonable, especially given GME is trading not much below that now.
Not sure about those dates, but when GME was somewhere between $40-$100, the lead plaintiff decided Gill was wrong, the short squeeze was squoze and decided to short the stock.
So after Iovine shorted the stock, Gill posted screenshots of his holdings (plus cat pics on twitter), and it is Gill's fault that Iovine got squeezed?
So to summarize, Gill warned of a short squeeze, Iovine decides to short the stock anyway, Iovine got squeezed, and now Iovine is suing?
That has to be the worst lead plaintiff ever.
but the best part is this quote...
Reminder, this is not the government/SEC suing. But a lawyer suing on behalf of individuals in a class action lawsuit.
He may have been the spark but I think Reddit admins and /r/wallstreetbet moderators deserve a lot more of the blame than this guy for basically pouring kerosene on the fire. Once it hit $100 there should have been a constant sticky on that subreddit correcting some of the blatant misinformation and hype trains.
Does it detail his plan at all? I'm using firefox reader to bypass the paywall but I'm not sure I got the whole article. From what I read the lawsuit is basically "he's not an amateur therefore he misled people." Are finance professionals required to disclose their status when offering unsolicited opinions on the stock market? I have no idea. I wouldn't be surprised if he does end up getting investigated but I don't think this lawsuit is it -- it seems like the last-ditch effort of someone who went broke selling naked calls:
From the complaint:
licensed by and associated with MML and MassMutual, Gill was
obligated to follow various securities laws, Securities and Exchange
Commission (“SEC”) rules and regulations, and FINRA rules. For
example, the FINRA rules applicable to Gill include:
a. Rule 2010 requires Gill to conduct his business in observance of
“high standards of commercial honor and just and equitable principles
of trade.”
b. Rule 2020 prohibits Gill from inducing “the purchase or sale of[] any
security by means of manipulative, deceptive or other fraudulent
device or contrivance.”
c. Rule 2111 requires Gill only to recommend a security that is suitable
for the recipient of the communication.
d. Rule 2210 requires that Gill’s communications with the public,
including on social media, (i) are based on principles of fair dealing and
good faith, must be fair and balanced, and must provide a sound basis
for evaluating the facts in regard to any particular security or type of
security, industry, or service, (ii) not omit any material fact or
qualification if the omission, in light of the context of the material
presented, would cause the communication to be misleading, (iii) not
contain any false, exaggerated, unwarranted, promissory, or
misleading statement or claim in any communication, (iv) be clear and
not misleading within the context in which they are made, and that
they provide balanced treatment of risks and potential benefits, (v)
must provide details and
5
Case 1:21-cv-10264 Document 1 Filed 02/16/21 Page 8 of 36
explanations appropriate to the audience to which the communication
is directed, (vi) must not bury material information in footnotes, and
(vii) must not include a prediction or forecast of future performance or
make exaggerated or unwarranted claims or forecasts.
e. Rule 3210 prohibits Gill from having accounts with brokerage firms
other than the firm with whom he is licensed without the permission of
the licensing firm.
I think Matt Levine made the point recently that this is allowed. GME short sellers did exactly that, being loud and clear why they thought GME was going to zero.
Good point, sorry for misunderstanding/ mischaracterizing your point of view.
Roaring Kitty cashed out $10m early on, but then left $30-40m on the table.
Hundreds of people were posting "If he holds, I hold."
He seems to have been caught up in the hype himself.
BTW, the top WSB moderators were ultimately booted off Reddit.
This reminds so much of Kony2012. Where a small but well thought out 'idea' and 'action plan' is totally overwhelmed by the massive wave that Social Media can create.
What is it that makes you sure he was in it for the pump and dump rather than a belief in the fundamentals? I ask that as an honest question - it's something I've been following at arm's length, at best, but I haven't seen anything to indicate that he wasn't sincere, even if others were taking advantage.
That said, I'm a sucker for a good David and Goliath story and I've just read the statement that @Deimos linked further down, so it's fair to say I'm inclined in his favour right now - perhaps unjustly so, I don't know.