GameStop and Chewy slide after Roaring Kitty is sued for pump-and-dump scheme

Keith Gill, also known as Roaring Kitty, is facing securities fraud claims in a class-action lawsuit over the recent flurry of social media posts that saw the share price of GameStop Corp. (NYSE:GME) swing wildly in May and June. The lawsuit was filed by Martin Radev on behalf of other investors that may have had losses from the GameStop (GME) drama.

Key snippets from the lawsuit are below.

“Defendant was a key figure in the so-called meme stock movement, which saw shares of GameStop and a handful of other companies surge as much as twenty-one-fold over two weeks in January 2021 before crashing to pre-surge levels in the subsequent days.”

“Defendant engaged in a pump-and-dump scheme, whereby he: (i) shortly before his May 12, 2024 social media post on X, and unknown to investors, quietly purchased a large volume of GameStop call options on E*Trade at comparatively low prices; (ii) on May 12, 2024, reignited the meme stock movement and pumped the value of GameStop securities with his first social media post on X in nearly three years; (iii) after the prices of GameStop securities had abated, pumped the value of GameStop securities again via a June 2, 2024 post of his GameStop portfolio on Reddit, disclosing his large position in GameStop securities, including 120,000 GameStop call options and 5 million shares of GameStop stock; and (iv) by June 13, 2024, quietly sold and/or exercised (i.e., dumped) all 120,000 of his GameStop call options for a large profit, seemingly to increase his own stake in GameStop stock by over 4 million shares, belatedly revealing as much to investors on June 13, 2024, during after-market hours. 16.”

“As a result of Defendant’s wrongful acts and omissions, and the precipitous decline in the market value of the Company’s securities, Plaintiff and other Class members have suffered significant losses and damages.”

“During the Class Period, Defendant circulated and disseminated materially false and misleading information as alleged in this Complaint, which he knew or deliberately disregarded were misleading in that the information contained misrepresentations or failed to disclose material facts necessary in order to make the information, in light of the circumstances under which the information was provided, not misleading.”

Roaring Kitty is also creating some drama with Chewy (NYSE:CHWY). A mysterious social media post of a dog picture was followed on Monday by a SEC filing that indicated that Gill owned 9 million shares in the online retailer.

Shares of GameStop (GME) were down 8.28% in late morning trading, while Chewy (CHWY) shed 8.05%.