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Roaring Kitty Cleared as GameStop Fraud Lawsuit Withdrawn Within 72 Hours

Last Updated July 2, 2024 2:20 PM
Teuta Franjkovic
Last Updated July 2, 2024 2:20 PM
Key Takeaways
  • The class action lawsuit against Keith Gill, aka ‘Roaring Kitty’, was withdrawn three days after filing without a disclosed reason
  • Keith Gill faced a lawsuit alleging securities fraud related to his social media activity.
  • Gill’s online presence continues to impact the market as indicated by recent pet stock volatility.

A class action lawsuit against Keith Gill, better known as Roaring Kitty, was retracted  just three days after its filing, having been active in court for only one business day.

The specific reasons for the lawsuit’s swift withdrawal have not been disclosed, leaving the possibility that the plaintiffs might pursue similar legal action against Gill in the future.

Class Action Lawsuit Against ‘Roaring Kitty’ Withdrawn After Just Three Days

A lawsuit filed by Martin Radev, a shareholder of GameStop, alleges that  Gill manipulated the stocks to benefit himself. However, a court filing submitted late Monday afternoon showed that Radev had withdrawn the litigation.

Keith Gill and Pomerantz LLP did not immediately respond to a request for comment.

Roaring Kitty Accused of Securities Fraud

Keith Gill, better known as Roaring Kitty, was recently facing accusations  of securities fraud in a class-action lawsuit linked to GameStop.

The lawsuit  claimed that his social media activities contributed to significant fluctuations in GameStop’s stock prices during May and June.

The legal action contended that Gill’s posts on various platforms played a pivotal role in the unusual volatility observed in the market during that period.

On June 28, a lawsuit was filed  in the Eastern District of New York against Keith Gill, famously known as Roaring Kitty, for his role in the GameStop trading frenzy of 2021.

In May, Gill made a notable return to social media by posting GameStop-related memes  on his X account for the first time in three years, an action the lawsuit characterizes as a re-engagement with GameStop securities. The filing highlights this activity as significant.

Subsequently, in early June, Gill revealed through a Reddit post  that he held a substantial position in GameStop, consisting of 5 million shares and 120,000 call options with a strike price of $20. This disclosure triggered a sharp increase in GameStop’s stock value, with shares soaring over 70% in early premarket trading on June 3.

Keith Gill has turned his original $53k investment into over $220 million dollars by investing in the one company MSM keeps begging us to forget 🤔  
byu/Hungry_Band9109  inSuperstonk 

Lawsuit Alleging GameStop Stock Manipulation

The lawsuit claims that Gill attempted to inflate GameStop’s stock prices. Following these actions, E-Trade reportedly considered banning him from its platform due to concerns over stock manipulation.

On June 13, Gill disclosed  the acquisition of an additional 4 million GameStop shares, valued at $262 million. The plaintiffs in the case assert that Gill engaged in a pump-and-dump scheme, which they allege led to financial losses for other investors.

The complaint states that Gill spread false and misleading information aimed at increasing the stock prices of GameStop. As a result, the plaintiffs are now seeking a trial.

GME YOLO update – June 13 2024 
byu/DeepFuckingValue  inSuperstonk 

Former federal prosecutor Eric Rosen, expressed skepticism about the success of the lawsuit against Gill. In a blog post  dated June 30, Rosen discussed the expectations surrounding Gill’s financial maneuvers, noting that no reasonable investor would anticipate Gill holding his options until their exact expiry date.

Rosen also critiqued the basis of the lawsuit, which hinges on the decision of investors to rely solely on the cryptic social media posts of someone using the moniker “Roaring Kitty.” He emphasized that proving fraud in court demands clear evidence of intentional deception, which, in his view, is absent in this case. This lack of substantial evidence, according to Rosen, significantly undermines the likelihood of the lawsuit’s success.

Sparking Volatility in Pet Care Stocks and Meme Coin Frenzy

Keith Gill is a financial analyst turned influential Reddit investor who played a pivotal role in the GameStop short squeeze of 2021. Gill argued that the video game retailer was undervalued and managed to spark a massive wave of interest among retail investors through his posts on Reddit’s r/wallstreetbets forum. His advocacy and insights contributed to a meteoric rise in GameStop’s stock price, which surged 1600% , dramatically impacting hedge funds that had positioned themselves against the stock.

Following these events, Gill was called to testify before Congress  where he reiterated his position as a dedicated and enthusiastic investor who genuinely believed in the potential of GameStop.

Last week, Gill demonstrated his continued impact on niche areas of the stock market when the highly anticipated airdrop for the Ethereum layer-2 network, Blast, seemed to underperform expectations.

After a long hiatus, the well-known GameStop enthusiast made a sudden comeback to Twitter last Thursday. He posted  an enigmatic image of a cartoon dog, without any accompanying text, marking his return to the platform.

Within just 15 minutes, the subtle cue from Roaring Kitty’s post—aptly described as a dog whistle—triggered significant surges in major pet care stocks. Chewy, Inc.  skyrocketed by 33%, Petco ‘s stock (WOOF) climbed 14%, and PetMed Express  (PETS) experienced a 7% increase.

Chewy stock
Credit: Google Finance

These rapid jumps momentarily generated billions of dollars in market value. However, almost as quickly as they rose, these gains were wiped out, illustrating the volatile nature of the market influenced by such enigmatic social media activity.

In a trend that’s becoming increasingly common with such market phenomena, a Solana-based meme coin named CHEWY  saw a staggering 11,000% surge , spurred by the news cycle surrounding Roaring Kitty’s post. Intriguingly, it appears that some traders had begun purchasing the token even before Roaring Kitty shared his canine-themed post on Twitter, suggesting anticipatory or insider activity based on the potential influence of his social media presence.

GameStop and Chewy Link Highlighted by Shared Leadership and Market Trends

Ryan Cohen, the founder and former CEO of Chewy, played a pivotal role in PetSmart’s acquisition of Chewy  in 2017 and its later public offering in 2019. Cohen’s connection to Chewy  extends into his tenure with GameStop, where he, along with two other Chewy executives, joined the board of directors in January 2021. This move was instrumental in sparking the initial GameStop stock rally. In 2023, Cohen stepped up as CEO of GameStop, aiming to revitalize the traditional video game retailer.

During the pandemic, shares in pet retailers like Chewy and Petco surged as home-bound consumers adopted pets at high rates, leading to increased purchases of pet accessories such as beds and leashes. However, as the pandemic waned and people began to resume outdoor activities, the rate of pet adoptions decreased, and the demand for discretionary pet products, which typically offer higher profit margins than pet food, slowed.

Despite the decline in sales of high-margin items, Chewy and Petco have maintained robust sales in pet food over the past year, demonstrating a shift in consumer spending within the pet care market.

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