Things have finally calmed down after the odd kerfuffle around the price of GameStop stock that occurred late last January. Except for the day traders who caused the situation, who are now having to deal with regulators who think what they did might be illegal.
Late last month, several investors on the subreddit r/WallStreetBets noticed that a number of hedge funds were shorting GameStop stocks, effectively betting on them to lose. In order to mess with the hedge fund managers (and make some money on the side), the Redditors of r/WallStreetBets worked together to buy as much GameStop stock as possible. This raised the price from less than $5 to a ludicrous over $300 at it’s peak before eventually crashing back to its normal price.
Right now, a lot of groups are looking into what happened last month. President Biden’s Justice Department is currently holding an investigation, and another group interested in knowing more is the United States House Committee on Financial Services. To that end, yesterday they heard from investor and r/WallStreetBets contributor Keith Gill, known by multiple usernames online, such as RoaringKitty, his username on Twitter and YouTube.
Gill’s testimony largely revolved around his supposed reasons for buying into GameStop stock. He talked about how his purchase was based “entirely on publicly available information,” and thus was not insider trading. He also talked about how he supposedly “believed the company was dramatically undervalued by the market,” and had “felt that way in December, far before the peak.”
Gill was one of several Redditors who made big on the spike in GameStop stock prices, he was one of several Redditors reportedly made millions. About 7.8 million, to be exact. So it’s easy to see why the United States Congress might want to look into his conduct to make sure all the advice he gave fell in line with the law, and none of it fell under the definition of illegal stock manipulation.
Of course, along with this investigation, Gill is also being sued for fraud. According to the lawsuit, he apparently originally invested in GameStop back in 2019. So his encouraging people to buy and hold the stock en masse, thus forcing its price to rise, could be seen as illegal market manipulation in that he advised Reddit to buy GameStop en masse so that his own stocks would rise in price and he could profit from them, regardless of the costs to his fellow Redditors. The public will only know for sure when the investigations have concluded.
Source: IGN
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