Keith Gill Accused Of Committing Securities Fraud In Class Action Lawsuit

Keith Gill, the stock trader famously involved in the 2021 GameStop short-squeeze, is facing allegations of securities fraud in a recent class-action lawsuit. The lawsuit, filed in late June in the Eastern District of New York, accuses Gill of conducting a pump and dump scheme through a series of social media posts starting May 13th.

Lack Of Transparency

According to the complaint, Gill is accused of committing securities fraud by allegedly not properly disclosing his trading activities involving GameStop options calls. This lack of disclosure purportedly misled his followers and resulted in financial losses for some investors, including the plaintiff Martin Radev, who claims to have suffered due to the alleged scheme after purchasing GameStop shares and call options in mid-May.

Despite these claims, a former federal prosecutor, Eric Rosen, believes the lawsuit is likely to fail. Rosen argued in a blog post that the complaint is fundamentally flawed and could easily be dismissed if Gill files a motion to dismiss. He criticized the assertion that Gill should have disclosed his intentions regarding the sale of his options calls in advance, suggesting that such a requirement would be unreasonable and not typical in the securities market.

The Devil Is In The Details

Rosen also pointed out that the case put forth by the plaintiff relies on the assumption that investors should base their decisions solely on social media posts, rather than on verified financial information. He emphasized that proving fraud typically requires demonstrating intentional deception or false statements, which he believes is lacking in this situation.

In summary, while the lawsuit against Keith Gill alleges securities fraud related to his GameStop trading activities and social media posts, legal experts like Eric Rosen suggest that the case faces significant challenges and may not hold up in court.