Did Keith Gill Break The Law?

Investor and social media personality Keith Gill, also known as Roaring Kitty, DeepFuckingValue (DFV), and DeepFkingValue, became the face of the Gamestop short squeeze in 2021. Since then, he has been accused of market manipulation and sued for securities fraud. However, opinions vary on whether Gill has actually broken any laws. While some securities lawyers argue that he has not crossed any legal lines, others claim that he has manipulated the market. Gill has denied soliciting anyone to buy or sell stocks for his own profit and has not been charged with any crimes.

Did Keith Gill manipulate the market?

In 2021, Keith Gill, known as Roaring Kitty, became the face of the Gamestop short squeeze. His posts on the subreddits r/wallstreetbets and r/SuperStonk, as well as his YouTube and Twitter content, were cited as a driving factor in the GameStop short squeeze of January 2021, and as a spark for the subsequent trading frenzy in retail stocks.

Gill's posts were described as "forthright, spreadsheet-laden content". He claimed to be a proponent of value investing, and his Reddit username, DeepFuckingValue (DFV), derives from the investing term deep value. Gill's initial investment of $53,000 in GameStop stock in June 2019 grew to $50 million by January 2021.

The question of whether Gill manipulated the market is a complex one. A class-action lawsuit filed against him in 2024 accused him of securities fraud and claimed that he sought to manipulate the stock for his own gain. However, this lawsuit was dropped within days of its filing, and it is unclear why.

When asked if Gill had broken any rules, securities lawyers had varying opinions. Some believed that he hadn't crossed any lines, as there was no deliberate attempt to manipulate a stock, no financial interest in that stock, and no artificial price created. However, others argued that he should have known how his posts would affect market prices, and his actions could potentially open the door to scrutiny from the SEC.

It is worth noting that Gill testified before the US House Financial Services Committee in February 2021, stating that he "did not solicit anyone to buy or sell the stock for [his] own profit" and that he "did not provide personal investment advice or stock recommendations". Additionally, an attorney for Gill stated that less than 5% of the trades in question were in GME, raising speculation that Gill's actions may have been selectively omitted or taken out of context.

In conclusion, while there are accusations and speculation surrounding Keith Gill's influence on the GameStop stock, there is no clear evidence that he manipulated the market, and the lawsuit brought against him was dropped.

Did he break securities laws?

In June 2024, Keith Gill, also known as Roaring Kitty, returned to social media after a three-year hiatus. His return sparked a series of questions, including whether he had crossed the line into stock manipulation.

When asked whether Gill had broken any rules, securities lawyers' opinions varied.

Christina Sautter, a professor at the Dedman School of Law at Southern Methodist University, said that Gill hadn't crossed any lines. According to Sautter, there are two different paths to showing market manipulation under securities laws. Courts require three things to prove a violation of Section 9(a)(2): a deliberate attempt to manipulate a stock, a financial interest in that stock, and the creation of an artificial price. Similarly, Rule 10(b)(5) targets actions that deceive investors by artificially inflating or deflating stock prices. Sautter doesn't believe that Gill fulfilled either of these criteria.

Peter Molk, a professor at the University of Florida, acknowledged that there are arguments to be made in both directions. On the one hand, the fact that Gill didn't reference GameStop by name weighs against market manipulation liability. On the other hand, one could argue that he should have known how his posts would affect market prices, given the track record and history of his previous involvement with the company.

Charles Korsmo, a law professor at Case Western Reserve, stated that while Gill's posts didn't seem deceptive, the Securities and Exchange Commission (SEC) hates it when someone makes a lot of money by doing things that seem unrelated to the normal functioning of securities markets. Korsmo acknowledged that pursuing an enforcement action against Gill would be "breaking new ground".

Joan MacLeod Heminway, a law professor at the University of Tennessee, suggested that it might be too early to tell whether Gill had broken any securities laws. She noted that the SEC would view the situation with the benefit of hindsight and that any claim of manipulation would be difficult to make at the present time.

In October 2021, the SEC released a 45-page report acknowledging that "people may disagree about the prospects of GameStop and other meme stocks" and did not indicate that any market manipulation had occurred.

Despite this, Gill faced a securities fraud class-action lawsuit in 2024, alleging that he artificially inflated GameStop's stock. The lawsuit was filed by Martin Radev, a GameStop shareholder, who later voluntarily dismissed the case.

Additionally, in February 2021, Gill was charged with violating federal securities laws in the Massachusetts District Court, alongside MML Investors Services, LLC ("MML") and Massachusetts Mutual Life Insurance Company. The law firm handling the case framed Gill's involvement as having undue influence on his followers, resulting in significant damage to investors. However, it is worth noting that Gill's role at MassMutual was not as a financial advisor, and he did not offer investment advice to his clients.

What was the result of the lawsuit against him?

The lawsuit against Keith Gill, also known as Roaring Kitty, was dropped within days of its filing. The lawsuit was a proposed class action filed in Brooklyn, New York's federal court by GameStop shareholder Martin Radev. Radev accused Gill of securities fraud, claiming that he had sought to manipulate the stock for his own gain. However, Radev voluntarily dismissed the lawsuit, although it is unclear why he did so. It is important to note that Radev is free to file the lawsuit again if he wishes.

While the lawsuit against Gill was dropped, there have been other legal consequences related to his activities. In September 2021, Gill's former employer, MassMutual, was fined $4 million by Massachusetts regulators for failing to supervise Gill's trading and online activity. Additionally, Gill's online activities and their potential impact on stock prices have raised concerns among some companies and investors. For example, E*Trade considered removing Gill from its platform due to concerns about potential stock manipulation.

Some legal experts and securities lawyers have offered differing opinions on whether Gill's activities crossed the line into stock manipulation. While some argue that he did not break any rules, others suggest that he may have influenced the market indirectly by not explicitly mentioning GameStop in his communications. The Securities and Exchange Commission (SEC) has the power to step in and take action if they believe market manipulation has occurred, but it is unclear if they will do so in this case.

Overall, while the lawsuit against Keith Gill was dismissed, his activities have sparked ongoing debates about the legality and ethical boundaries of his influence on stock prices and retail investors.

Did he break any rules as a CFA charterholder?

Keith Gill was a Chartered Financial Analyst (CFA) charterholder. However, he no longer appears in the CFAI member directory.

It is unclear whether Gill's charter was revoked or if he stopped paying for it. One source suggests that he may have stopped paying his annual fees to renew his charter, as he likely made tens of millions of dollars from the GameStop short squeeze.

As a CFA charterholder, Gill would have been subject to certain ethical standards and rules. One source suggests that Gill may have violated these standards by identifying himself as a charterholder while posting under a pseudonym on Reddit. The source cites the following rule:

> "Given the growing popularity of social media, where individuals may anonymously express their opinions, pseudonyms or online profile names created to hide a member’s identity should not be tagged with the CFA designation."

Additionally, it has been argued that Gill may have intentionally attempted to manipulate the market through his social media following, which would also be a violation of CFA ethical standards.

However, it is important to note that the CFA Institute has not publicly commented on whether Gill's charter was revoked or if he violated any rules.

Did he break any rules as an employee of MassMutual?

In 2021, Keith Gill was employed by MassMutual as a financial marketer and educator. He helped create financial education classes for prospective clients but was not a stockbroker or financial advisor. He did not talk to clients or recommend stocks for them to buy.

In September 2019, Gill posted about a $53,000 long position in GameStop on the subreddit r/wallstreetbets under the username "u/DeepFuckingValue". He also posted YouTube videos arguing that the stock was undervalued. Gill's posts attracted a flood of retail investors to buy GameStop stock, causing a short squeeze in January 2021.

In February 2021, William Galvin, the Massachusetts Secretary of the Commonwealth, wrote to MassMutual to investigate whether Gill or the company broke any rules related to his activities in promoting GameStop stock. MassMutual was later fined $4 million by Massachusetts regulators for failing to supervise Gill's trading and online activity. An attorney for Gill stated that Gill executed trades for three family members and that less than 5% of the trades in those accounts were in GME.

It is unclear whether Gill broke any rules as an employee of MassMutual. While he did not offer investment advice to clients or recommend stocks, his online activities may have indirectly influenced people to invest in GameStop. The fine imposed on MassMutual suggests that there was a lack of oversight regarding Gill's activities, but it is not clear if he violated any specific rules or regulations.

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