<div id="readability-page-1">Is one of the most powerful investing influences guilty of market manipulation? A recent lawsuit filed by the Eastern District of New York alleges that Keith Gill, known on social media as Roaring Kitty, has engaged in a pump-and-dump scheme involving GameStop (NYSE:GME) stock. Gill is famous for helping engineer the short squeeze of 2021, which took GME stock to new heights. But now it seems that the influencer, who recently returned to X, formerly Twitter, after a multi-year hiatus, may have done so with allegedly nefarious intentions and engaged in illicit activity. At least that’s what the lawsuit, filed by plaintiff Martin Radev, contends. News of this lawsuit has pushed GME stock down today, creating volatility for other meme stocks. As GameStop goes, other r/WallStreetBets favorites are likely to follow. This development could pose significant consequences for many popular retail investing community favorites, especially if further legal action is taken against Gill. <h2>Is Roaring Kitty Manipulating GME Stock?</h2> When Gill randomly returned to social media on May 12, 2024, his followers rejoiced. Gill’s post, a drawing of someone playing video games, didn’t come with much context, but it proved enough to ignite a rally for meme stocks. GME stock surged, and many other struggling companies followed, such as AMC Entertainment (NYSE:AMC) and KOSS (NASDAQ:KOSS). But Roaring Kitty’s return to the spotlight also brought negative attention. Less than a month later, Bill Galvin, the Secretary of State in Gill’s native Massachusetts, announced a probe into Gill’s trading activity. Morgan Stanley (NYSE:MS), the owner of the popular trading app E-Trade, also considered kicking him off the platform due to potential market manipulation. Now, the allegations against Gill are picking up traction. As the retail investing blog Unusual Whales reports: <blockquote> “The lawsuit claims that Gill secretly purchased a substantial number of GameStop call options before making a social media post on May 12, 2024, which reignited interest in the company’s stock. As a result, the stock price surged by over 74% the following day. Gill then allegedly disclosed his large stake in the company on June 2, causing another increase in the stock price.” </blockquote> <figure><div> <blockquote>Roaring Kitty of GameStop, $GME, has been sued in the Eastern District of New York for securities fraud related to his recent tweets about GameStop, per Dynamis LLP.— unusual_whales (@unusual_whales) July 1, 2024</blockquote></div></figure>As The Wall Street Journal revealed on June 2, Gill purchased a significant chunk of GameStop call options just before his May 12 post. On June 13, he posted a screenshot of his portfolio. This showed that he had exited the call options but doubled down on GME stock. The lawsuit describes these transactions as a pump-and-dump scheme orchestrated by Gill, which would put him in direct violation of federal securities laws. <h2>Why It Matters</h2> If Gill is guilty of taking part in a GameStop pump and dump, it wouldn’t be surprising. It also wouldn’t be the first time that the retail investing community has fallen victim to such a scam. In December 2022, the U.S. Securities and Exchange Commission (SEC) brought charges against eight social media influencers on the grounds that they had orchestrated a “$100 million securities fraud scheme” over Twitter, now X, and Discord. This list included Edward Constantin and Perry Matlock, known on social media as @MrZackMorris and @PJ_Matlock. Now, it seems that Roaring Kitty may have a similar fate. He is beloved in the meme stock community and revered with an almost cult-like devotion. But if Gill is found guilty, GME stock will likely suffer. And it will drag many other meme stocks along with it. Gill is famous for stating, “I like the stock,” which became a battle cry among retail investors. But if the lawsuit’s allegations are correct, he may not have liked it enough to follow federal law. The 2023 film Dumb Money portrayed him as the story’s hero. But as InvestorPlace contributor Chris MacDonald notes, smart money is avoiding the troubled GME stock. On the date of publication, Samuel O’Brient did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines. On the date of publication, the responsible editor did not have (either directly or indirectly) any positions in the securities mentioned in this article. Samuel O’Brient is a Reporter for InvestorPlace, where his work focuses primarily on financial markets, global economic trends, and public policy. O’Brient writes a weekly column on recent political news that investors should be following.Consumer Discretionary, Retail, Technology, Video GamesMeme Stocks </div>

GameStop (GME) stock falls as Roaring Kitty faces pump-and-dump lawsuit. Keith Gill, known as Roaring Kitty on social media, is accused of engaging in illicit activity and market manipulation. The lawsuit alleges that Gill orchestrated a pump-and-dump scheme involving GameStop stock. This news has caused volatility for meme stocks and could have significant consequences for retail investing favorites.

- A lawsuit filed in the Eastern District of New York alleges that Keith Gill, known as Roaring Kitty, engaged in a pump-and-dump scheme with GameStop stock, impacting meme stocks' volatility. 
- Gill's return to social media sparked a rally for meme stocks, but regulatory scrutiny followed, with allegations of market manipulation and potential violations of federal securities laws. 
- If found guilty, Gill's actions could significantly affect GME stock and other meme stocks, contrasting his hero-like image in the retail investing community with potential legal consequences.

GameStop (GME) Stock Falls as Roaring Kitty Faces Pump-and-Dump Lawsuit