Roaring Kitty’s GameStop Bet Sparks Tumult as ETrade and Morgan Stanley Weigh Account Closure

• Keith Gill, widely known as Roaring Kitty, might be dropped by ETrade, a leading retail stock trading platform.
• ETrade’s concerns about potential stock manipulation related to Gill’s recent GameStop (GME) purchases have been highlighted.
• According to the Wall Street Journal, Gill’s re-emergence on social media has significantly impacted the stock market, notably affecting GME stock.

Keith Gill, famed as Roaring Kitty, faces scrutiny from ETrade over potential stock manipulation of GameStop shares.

ETrade’s Concerns Over Potential Stock Manipulation

The Wall Street Journal reported that ETrade, under the ownership of Morgan Stanley, is currently troubled by possible stock manipulation associated with Keith Gill’s recent acquisitions of GME stock. The concerns arose following a screenshot shared on Reddit, showcasing an investment account with over $200 million in GameStop shares and call options. This post stirred significant attention, suggesting substantial moves orchestrated by Gill highlighting increased market volatility.

Impact of Gill’s Social Media Activity

The online activities of Keith Gill, particularly under his alias Roaring Kitty and DeepFuckingValue, have had a profound impact on the stock market. His return to Twitter and Reddit after a hiatus prompted a remarkable 100% increase in GME stock’s price, bringing substantial losses to short sellers who had bet against it. The massive price hike reverberated across various market segments, even ballooning the price of an unofficial GME tribute meme coin on the Solana blockchain by over 150%.

Historical Context and Market Reactions

This current scenario evokes memories of the 2021 meme stock frenzy, where similar interplays between social media-driven investing and traditional stock markets caused significant disruptions. Back then, platforms like Robinhood had to periodically halt trading for stocks such as GME and AMC Entertainment due to surges in volatility driven by retail investors. This led to widespread criticism and culminated in legislative hearings on Capitol Hill. Gill’s trades have again underscored the potential of individual investors to influence market dynamics profoundly.

Morgan Stanley’s Dilemma

Responding to Gill’s market activities, Morgan Stanley has closely monitored his ETrade account. Reports indicate that Gill purchased call options before his social media activities, potentially profiting largely due to the resulting stock movements. In response, Morgan Stanley’s financial crimes unit and external counsel have been engaged to deliberate on potential actions. Nonetheless, the risk of alienating retail clients following in Gill’s steps poses a significant challenge. Any drastic measure against Gill could possibly deter ETrade customers, highlighting a contentious balancing act for Morgan Stanley.

Conclusion

Keith Gill’s market maneuvers with GameStop highlight the evolving landscape of stock trading, heavily influenced by social media engagements and retail investor actions. While ETrade evaluates its response amidst these dynamics, the ongoing developments reiterate the potent influence individual traders can wield. As the situation unfolds, market participants will keenly watch for further implications and strategic decisions by major financial entities like Morgan Stanley.