E*Trade, the online brokerage platform, is reportedly contemplating the removal of Keith Gill, also known as “Roaring Kitty,” from its platform due to concerns over potential stock manipulation involving GameStop (GME). According to The Wall Street Journal, Gill’s recent activities on X and Reddit have raised alarms.
Prior to his return to X last month, Gill purchased a significant amount of GME options on E*Trade. These options expired the following week, likely resulting in a profit for him. Morgan Stanley and E*Trade are concerned that Gill may use his influence to artificially inflate GME stock for personal gain. They are currently debating whether his recent posts on X and Reddit could be classified as market manipulation.
Gill played a significant role in the meme stock rally of 2021 and his return to X on May 13 caused meme stocks and meme coins to rise. On June 2, Gill posted on Reddit, revealing that he holds $181.4 million worth of GME stock and call options. He is betting that GME will reach at least $20 per share by June 21. Following Gill’s post, GME rose over 19% in Sunday night trading and closed up 21% on June 3 at $28, with an additional 8.5% increase in after-hours trading to $30.36, according to Google Finance.
Gill’s activities have attracted the attention of the Massachusetts Securities Division and the Securities and Exchange Commission (SEC), both of which are investigating his actions. The SEC is reviewing options trades around the time of Gill’s X posts. Gill, who holds several securities-industry licenses and was a registered broker with Massachusetts Mutual Life Insurance, continues to be a subject of concern for regulators and financial institutions.
E*Trade and Morgan Stanley are faced with a difficult decision. Removing Gill from the platform could result in negative attention and potential backlash from other users who may close their accounts in solidarity. However, allowing him to remain poses risks of ongoing market manipulation. No decision has been made yet, and the firms may choose to take no action. Discussions are ongoing, with both companies considering the potential consequences of their decision.
The future of Keith Gill on E*Trade remains uncertain, and he has not yet responded to inquiries regarding the situation. E*Trade, Morgan Stanley, and the Massachusetts Securities Division have also not provided immediate comments.