Suspected of market manipulation? Retail investor's 'big brother” is investigated by U.S. regulators

Written by: Chang Jiashuai

Source: Wall Street Insights

Keith Gill, the retail investor leader who led the meme stock movement three years ago, has continued to gain momentum since his return, and has recently been on social media The delivery order of Game Station (GME), which is worth hundreds of millions of dollars, is being exposed, and retail investors are called on to buy. A new meme stock speculation frenzy seems to be brewing.

But the bad news is that his trading activities have attracted the attention of securities regulators in Massachusetts.

A spokesman for Massachusetts Secretary of State Bill Galvin’s office told the media that the Securities Division is investigating Gill’s conduct and that the investigation is ongoing.

Gill posted a screenshot of the transaction on Reddit on Sunday, showing that he holds 5 million GME shares worth $115.7 million, as well as 120,000 shares expiring on June 21 with an exercise price of 20 call options with a total value of $65.7 million.

Shares of GME closed up 20% on Monday, and during the session Gill posted a screenshot of his account showing he had more than $29.2 million in cash. Gill's GME position was worth more than $386 million as of Monday's open. On Monday night, he shared another screenshot on Reddit showing that he had not sold any shares.

The U.S. Securities and Exchange Commission (SEC) has reportedly been reviewing call options related to GME at the time of Gill’s social media posts, and it is currently unclear whether the SEC is specifically examining Gill.

In addition to regulators, there have been reports that E-Trade, a brokerage owned by Morgan Stanley, is considering banning Gill from using their platform for trading.

Gill himself has not responded to these inquiries.

Massachusetts regulators fined Gill's former company MassMutual Life Insurance $4 million after the 2021 meme stock craze, accusing MassMutual of failing to properly supervise Gill. Gill served as director of financial wellness education at the company until the end of January 2021.

Catalyzed by multiple negative factors, GME US stocks fell by more than 5% overnight and rose by about 2% in after-hours trading.

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