E*Trade Contemplates Action Against GameStop Meme Stock Trader Keith Gill

Reports have emerged that online brokerage platform E*Trade is deliberating the removal of Keith Gill, popularly known as 'Roaring Kitty,' from its platform due to concerns regarding potential stock manipulation.

Prior to a significant resurgence in GameStop shares fueled by Gill's actions last month, he had acquired a substantial volume of GME options on the E*Trade platform. Some of these options expired during the week, resulting in a probable profit for him, as disclosed by The Wall Street Journal.

The brokerage firm and its parent company, Morgan Stanley, are wary that Gill may exploit his influence to artificially inflate GameStop's stock for personal gain. Discussions are ongoing to assess whether Gill's recent social media posts on X and Reddit could be perceived as manipulative, according to insider sources.

There are concerns that removing Gill from the platform might attract negative attention, potentially leading other users to close their accounts in support of him. No final decision has been reached, and the firms involved may opt to take no action, as reported by The Wall Street Journal.

On May 13, Gill, a trader acknowledged for his role in the 2021 meme stock rally and the GameStop short squeeze, made a cryptic return to X after a three-year absence. This comeback marked the beginning of a surge in meme stocks and meme coins following his online presence.

Gill's subsequent post on Reddit on June 2 revealed his holdings of $181.4 million worth of GME stock and call options, anticipating a price of at least $20 per share by June 21. As a result, GameStop experienced over a 19% increase in trading activity on the following Sunday night. By June 3, the stock closed 21% higher at $28 and continued to climb by nearly 8.5% in after-hours trading, reaching $30.36, according to Google Finance.

Despite closing below its $40 opening on June 3, GameStop outperformed its Friday closing price of $23.14, reflecting an upward trajectory throughout the year. Gill's reappearance on X coincided with a significant gain in GameStop's value, surging by over 60% since his return.

Subsequently, Gill shared another update on Reddit on June 3, revealing a $33.6 million profit on his 5 million GME shares and a $51.8 million gain on his options.

Within the securities industry, Gill holds multiple licenses and was previously a registered broker at Massachusetts Mutual Life Insurance. The Massachusetts Securities Division is reportedly investigating Gill's activities, as confirmed by a spokesperson. Additionally, the Securities and Exchange Commission is scrutinizing GameStop call options trades surrounding Gill's online posts.

Although internal discussions within the SEC have raised questions about the nature of these options trades and the potential for manipulation, it remains unclear if an investigation specifically targeting Gill is underway.

Responses from E*Trade, Morgan Stanley, the SEC, and the Massachusetts Securities Division regarding these developments are still pending as Cointelegraph awaits their comments. As of now, there has been no official statement from Gill in response to inquiries sent via Reddit.