E-Trade may bar Roaring Kitty after GameStop stock surge: WSJ
What specific actions by Keith Gill are causing E-Trade to consider banning him from their platform?
Keith Gill, also known as "Roaring Kitty" or "DeepFuckingValue," may face a ban from E-Trade due to concerns of potential stock manipulation3. Gill, a prominent meme-stock trader, posted a screenshot on his Reddit account, revealing a $116 million position in GameStop. This disclosure caused the stock price to soar, sparking concern within E-Trade, which is owned by Morgan Stanley. The company is reportedly assessing whether Gill's actions count as manipulation and considering the potential backlash if they remove him from the platform3.
What concerns does E-Trade have regarding potential stock manipulation by Keith Gill?
E-Trade, a popular online brokerage platform owned by Morgan Stanley, is considering removing prominent meme stock trader Keith Gill from its platform amidst concerns of potential stock manipulation4. Gill, known on social media as "Roaring Kitty" or "DeepFuckingValue," has gained a significant following for his role in the 2021 GameStop short squeeze and his recent return to social media4.
Gill purchased a large volume of GameStop (GME) options on ETrade shortly before breaking his three-year social media silence last month. Some of these options expired within the week and likely resulted in a profit for Gill. Following his return to X and Reddit, GameStop’s stock price surged, raising concerns among ETrade and Morgan Stanley executives. The firms are now debating whether Gill’s recent posts could be considered manipulation, as they worry he may use his influence to pump GME for his own benefit.
However, they are also concerned about the potential backlash from Gill’s followers if they decide to remove him from the platform, as it could lead to negative attention and account closures in solidarity with the trader. On June 2, Gill posted a screenshot on Reddit showing he held $181.4 million worth of GME stock and call options, betting the stock would be at least $20 per share by June 21. This post caused GME to rally over 19% in Sunday night trading and close up 21% at $28 on Monday, June 3. The stock has gained nearly 68% this year and over 60% since Gill’s return to social media4.
Regulators are also reportedly investigating Gill’s activities. The Massachusetts Securities Division is examining Gill’s actions, as he holds several securities-industry licenses and was previously a registered broker with Massachusetts Mutual Life Insurance. The Securities and Exchange Commission (SEC) is also reportedly reviewing GameStop call options trades around the time of Gill’s X posts, discussing internally whether such trades could be considered manipulation. As of now, no decision has been made regarding Gill’s status on the E*Trade platform, and the firms may ultimately choose to take no action.
What is the significance of Keith Gill's $116 million position in GameStop as shown in the Reddit screenshot?
The significance of Keith Gill's $116 million position in GameStop, as shown in the Reddit screenshot, lies in its impact on the stock price and the potential implications for Gill himself.
Firstly, the screenshot led to a surge in GameStop's stock price. After the post, the stock more than doubled, adding around $6 billion to its market capitalization. This meteoric rise can be attributed to Gill's influence among retail traders, who have followed his investment strategies in the past, leading to the phenomenon known as the "meme-stock frenzy."
Secondly, the substantial position disclosed by Gill makes him one of GameStop's five largest investors. The screenshot showed a stake of 5 million shares with an average cost basis of $21.27 each. If verified, this would mean Gill's position is worth nearly $700 million based on where GameStop opened for trading following the post.
However, there are potential negative implications as well. The disclosure of this large position has reportedly led to an investigation by the Massachusetts securities division and concern from E-Trade, the trading platform owned by Morgan Stanley, about potential stock manipulation. Gill's reemergence on social media and the subsequent stock movements have caused concerns about market volatility and manipulation, which could lead to regulatory scrutiny and potential restrictions on Gill's trading activities.