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As a renewed bout of GameStop<\/a> Corp. fever gripped the meme-stock faithful, fans of trading influencer Keith Gill waited for one moment: The day their hero, aka \u201cRoaring Kitty,\u201d aka \u201cDeep F\u2014-ing Value,\u201d would become a billionaire.<\/p>\n The notion was hardly far-fetched. Over the course of two weeks, Gill had been posting images of a massive stake in GameStop and its call options in a portfolio that peaked at more than $550 million on June 6. Though he\u2019s added even more stock since then, the dollar value of his holdings has dropped along with the company\u2019s shares.<\/p>\n With the stock little changed since the early days of its\u00a0latest mania<\/a>, a new kind of anxiety is building among Wall Street and retail traders alike.<\/p>\n The original 2021 GameStop rally shook the idea of short-selling to its core \u2014 eroding the appeal of betting against a floundering company when you can wind up feeling the wrath of Redditors. This time around, the existential question is about what counts as market manipulation.\u00a0<\/p>\n Does posting a\u00a0meme<\/a>, potentially delivering an instant profit, violate the spirit of free and fair markets? Has the David versus Goliath nature of meme stocks shifted? What if Roaring Kitty\u00a0is\u00a0<\/em>the Goliath? And how exactly did he build a position bigger than Charles Schwab<\/a> Corp.\u2019s?<\/p>\n \u201cThe original meme stock craze was us versus them, with \u2018them\u2019 being the guys who would short-sell millennials\u2019 favorite companies like GameStop,\u201d said Steve Sosnick, chief strategist at Interactive Brokers. \u201cBut I\u2019m not sure who \u2018them\u2019 is anymore.\u201d\u00a0<\/p>\n Gill didn\u2019t reply to a request for comment.\u00a0<\/p>\n The populist ringleader of a short squeeze that shook Wall Street in the original 2021 meme-stock rally, Gill is losing his folksy charm, at least for some followers. Trading firms and even some former fans are eying Gill with more suspicion, as Redditors pose questions like: \u201cHow is Roaring Kitty coming back not a basic pump and dump scheme<\/a>?\u201d<\/p>\n By Thursday, Gill\u2019s brokerage account snapshots suggested he\u2019d unwound an earlier position of 120,000 call options and added more GameStop, upping his portfolio to about 9 million shares of the video game retailer, worth more than $262 million. (Gill\u2019s final post of 2021 showed he had 200,000 shares worth more than $30 million; GameStop did a four-for-one stock split in July 2022.)<\/p>\n As Gill\u2019s actions sent the price soaring again, GameStop seized on the volatility to sell more than $2 billion worth of stock.\u00a0<\/p>\n All told, anyone who bought shares over the past month and held was about as likely to lose money as profit. To some, one major difference is hedge funds and other sophisticated investors have adapted from three years ago and are likely to come out ahead \u2014 at the expense of Gill\u2019s retail-trading fans.\u00a0<\/p>\n \u201cSome of the quantitative managers have models to look at the trends in price and those models are extremely quick to get out of the stock if they see significant downside volatility,\u201d said Don Steinbrugge, chief executive officer of Agecroft Partners, which helps hedge funds raise money. \u201cAt some point retail investors are going to wise up and realize there\u2019s a lot of danger.\u201d<\/p>\n The episode brought to the fore questions of what constitutes market manipulation. The Wall Street Journal reported Morgan Stanley-owned brokerage E*Trade was considering barring Gill from its platform over such concerns, after previously banning other popular personalities like Dave Portnoy, the Barstool Sports founder who streams as Davey Day Trader and said he got kicked off of the brokerage.<\/p>\n A spokesman for E*Trade declined to comment.<\/p>\n What\u2019s singular about Gill\u2019s case is that market manipulation typically involves pushing a price higher to profit off the stock movement, said Craig Marcus, a partner and co-chair of the capital markets group at law firm Ropes & Gray. If Gill\u2019s snapshots are real, that hasn\u2019t obviously been the case, he said.\u00a0<\/p>\n \u201cYou can disagree with his thesis about the value of the stock, but if all he\u2019s doing is executing on his thesis and not doing manipulative things to profit,\u201d it\u2019s difficult to prove ill intent, Marcus said in an interview.<\/p>\n To be sure, Gill was accused of using his clout to manipulate prices even three years ago when he first arrived on the public stage. In 2021, a lawsuit against Gill and MassMutual alleged he was manipulating markets with his outsize influence on certain stocks.\u00a0<\/p>\n Read More: MassMutual Gets \u2018Roaring Kitty\u2019 Market Manipulation Suit Tossed<\/p>\n \u201cThree years ago this was funny,\u201d said Peter Atwater, an adjunct professor of economics at William & Mary. \u201cPeople have become more bothered by this than amused by it, and that to me is an indication that it is unlikely that this behavior will be allowed to continue.\u201d<\/p>\n When Gill scheduled a highly anticipated return to YouTube<\/a> on June 6 without details of what he\u2019d talk about, the stock shot up nearly 50%, adding $16 billion to its market value in a matter of hours.\u00a0<\/p>\n In the livestream, which garnered hundreds of thousands of viewers, Gill vamped for about an hour against the backdrop of GameStop\u2019s violently fluctuating share price. He seemed to sense the possibility he\u2019d draw more scrutiny from fans, regulators and trading professionals.\u00a0<\/p>\n \u201cDo I have to be careful what I say here?\u201d he asked.<\/p>\n<\/div>\n\nLosing Charm<\/h3>\n
Manipulation Concerns<\/h3>\n
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