Tag Archives: trading

Leader of GameStop crusade ‘Roaring Kitty’ could have broken federal rules by posting trading videos

The YouTuber known as Roaring Kitty, who became the face of the GameStop stock frenzy and also worked until last week as a broker, could be in legal trouble for potential violations of federal rules governing brokers’ communications with the public.

Keith Gill, 34, placed a huge bet on GameStop shares more than a year ago and shared his ideas about the stock online in the months leading up to the ‘meme stock’ bubble.

But his commentary may create a problem for Massachusetts Mutual Life Insurance Co., which employed him and had a duty to supervise him. 

Keith Gill, the YouTuber known as Roaring Kitty, is facing regulatory scrutiny

Securities regulators in Massachusetts are said to be investigating Gill and his former day job as a financial wellness education director at insurance company MassMutual. 

The company told regulators that it was unaware of Gill’s YouTube videos promoting GameStop stock, and that if it had known it would have asked him to stop or fired him, according to the New York Times.  

Although he didn’t advise specific clients on investments or insurance, he was not exempt from regulations that tightly regulate brokers’ conduct, securities lawyers have suggested to the Wall Street Journal. 

The once obscure YouTuber has become an unlikely celebrity in the clash between small investors and big hedge funds, and is seen by some as a folk hero and others as a dangerous disruptor of markets. 

Gill first touted GameStop as a potential investment more than a year ago

The Financial Industry Regulatory Authority (Finra) may well be taking a closer look at Gill

After shares of the struggling video game retailer skyrocketed 1,600 percent in January, as small investors inspired by the WallStreetBets message board on Reddit snapped up the stock to punish hedge funds that bet against it, the bubble collapsed this week, and is down more than 70 percent since Monday. 

Gill worked as a ‘financial-wellness education director’ but was a registered broker. He has already cashed out more than $13 million on his trades and was sitting on another $7.6 million in gains as of Wednesday, according to a screenshot of his brokerage account he posted on Reddit. At the height of the frenzy last week, his account was worth nearly $48 million.  

Gill gave his notice at MassMutual on January 21, but was technically still employed there until January 28, as the GameStop frenzy neared its peak, the company told regulators.

Gill quit his job at MassMutual on January 21 as GameStop shares exploded

He is a licensed securities broker, and licensed professionals have an ‘obligation’ to inform their employers about their outside activities, said William Galvin, the Massachusetts secretary of the commonwealth. 

On Friday, Galvin’s office sent a letter to MassMutual seeking information about Gill’s employment and whether the company was aware of his outside activities.  

‘I am not trying to inhibit anyone’s ability to access the marketplace,’ Galvin said. ‘The issue here is transparency.’ 

Over the last six months Gill posted dozens of videos, the majority related to his view that GameStop shares were undervalued and would rise as others took notice. 

Some videos looked at Gamestop’s past performance and forecasts but even posting online using a pseudonym does not absolve him of regulatory obligations, said lawyer Susan Light.

Gill is seen last week at his rented home in Massachusetts, where he lives with his wife and their two-year-old daughter

Shares of GameStop, which soared 1,800 percent in January in a speculative bubble fueled by small investors, have fallen nearly 84 percent in the first four days of this month

‘An average Joe can go on a website and say, “I like XYZ stock.” A broker can’t do that. It would make sense for the Financial Industry Regulatory Authority (Finra) to be interested in looking at this.’ 

‘If you have a registered person trading securities away from the firm and making recommendations to the general public, it is potentially a big supervisory miss,’ said Brad Bennett, a former Finra enforcement director to the Journal.

‘After 40 years in the industry, there is no question in my mind that if you are a registered representative [of a brokerage firm], you should not be communicating with anybody on Reddit,’ Bill Singer, a regulatory defense lawyer said. ‘That’s the safest thing to do.’ 

Gill’s videos included a disclaimer saying investors should consult with a financial adviser before making any investment decision and ‘should not treat any opinion expressed on this YouTube channel as a specific inducement to make a particular investment.’ 

Roaring Kitty continued to create topical memes regarding the stock’s soaring price

Andrew Calamari, a lawyer with Finn Dixon & Herling and a former director of the Securities and Exchange Commission’s New York office, told the Times that it was too soon to determine whether Gill had violated any securities regulations. 

But he said that Gill could have violated company rules at MassMutual if he did not receive permission for his posts on Reddit and YouTube. 

‘Firms don’t allow employees to go out and make predictions on stock,’ he said of employees other than analysts. 

Gill has not posted on YouTube since January 22, and on Wednesday he announced on Reddit that he would step back from providing daily updates on his GameStop position there. 

He has remained mostly silent on the controversy, aside from an interview with the Wall Street Journal last week. 

‘I didn’t expect this,’ he said. ‘This story is so much bigger than me… I support these retail investors, their ability to make a statement.’ 

Gill made an initial investment in GameStop of about $53,000 in June 2019. He later added to the investment, plowing in a total of $745,991. 

A five-day view of GameStop stock price shows the steep decline from its peak last week

GameStop stock price is seen in a one-year view, showing the shares spiking and falling

In his latest YouTube videos, filmed in his basement, he celebrated his success with as many as 200,000 fans, wearing sunglasses and a sweatband to hold back his shoulder-length hair and dipping chicken tenders (the mascot food of his followers) in Prosecco.

Gill gained notoriety in the Reddit trading forum WallStreetBets as he posted regular updates of his ‘YOLO [You Only Live Once]’ trade beginning in 2019 under the username DeepF***ingValue.

But Gill told the Journal his original decision to buy – at first ridiculed in WallStreetBets before it was venerated – was based on fundamentals about the company.

‘People were doing a quick take, saying GameStop was the next Blockbuster,’ he said, referring to the video store all but destroyed by the decline of retail and the rise of streaming services.

‘It appeared many folks just weren’t digging in deeper. It was a gross misclassification of the opportunity,’ he said. 

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GameStop shares are flat in volatile premarket trading after falling 72% in 2 days

Tiffany Hagler-Geard | Bloomberg | Getty Images

GameStop shares were flat in premarket trading on Wednesday as traders waited to see if the short squeeze fueled by retail investors on Reddit could be revived.

The stock had been down by more than 11% earlier on Wednesday morning but swung into the black shortly after 5 a.m. ET. The stock was last trading around the flatline at $91.44.

Shares of the bricks-and-mortar video game retailer surged 1,625% in January and 400% just last week, as traders led by Reddit thread WallStreetBets piled into the stock.

But the momentum collapsed earlier this week. Gamestop stock dropped 60% on Tuesday and it has lost more than 70% of its value since Friday.

Keith Gill, AKA Reddit’s DeepF——Value, posted on Tuesday that he is still not selling despite suffering a $13 million loss that day.

AMC Entertainment, another heavily shorted stock that was also targeted by Reddit traders, was up by around 6% in premarket trading.

Robinhood and other retail trading apps continue to limit some buying of a collection of stocks pursued by the Reddit thread. Many Wall Street hedge funds began short-covering toward the end of last week after taking significant losses in the squeeze.

Short selling is a strategy in which investors borrow shares of a stock at a certain price on expectations that the market value will fall below that level when it’s time to pay for the borrowed shares. Buying back borrowed shares to close out a short position, whether for a profit or loss, is known as short-covering.

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Robinhood CEO refutes ‘conspiracy theory’ that hedge funds prompted GameStop trading halt

Embattled Robinhood CEO Vlad Tenev denied Friday that pressure from Wall Street hedge funds prompted the mobile brokerage firm’s decision to restrict trades involving GameStop shares as prices surged this week.

Robinhood has faced unprecedented scrutiny in recent days from critics, including Congressional lawmakers and Barstool Sports founder Dave Portnoy, who alleged the platform halted trading of stocks favored by retail investors to protect hedge fund allies. In an interview with Yahoo Finance, Tenez referred to the allegations as a “conspiracy theory.”

WHAT ARE THE BLUE SHEETS? WHAT TO KNOW ABOUT THE TRADING DATA

“I think I’ve over and over again said that it’s not true,” Tenev said. “Our decision to temporarily restrict customers from buying certain securities had nothing to do with a market maker or a market participant or anyone like that putting pressure on us or asking us to do that. It was entirely about market dynamics and clearinghouse deposit requirements, as per regulation.”

Robinhood drew widespread criticism this week after it temporarily applied purchase limits to several stocks touted on Reddit’s “WallStreetBets” forum, including GameStop, AMC Entertainment and Nokia. The day trading app began accepting buys again on Friday, but enacted a limit of just one share per user as of the close of trading.

GameStop was one of the most-shorted stocks on Wall Street before the sudden interest caused the stock price to surge. The trading frenzy triggered a “short squeeze,” costing hedge funds that bet against the stock billions of dollars.

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Lawmakers on both sides of the political aisle, including Rep. Alexandria Ocasio-Cortez, D-NY, and Sen. Ted Cruz, R-Tx., have called for an investigation into Robinhood’s decision. In a blog post, the platform said the restrictions were meant to mitigate risk.

“I think if you look at this entire situation, it’s a novel situation,” Tenev added in the interview. “A relatively small number of stocks have gone viral on the internet. And as things that go viral on social media and the internet do, there’s an exponential growth in interest. And so we have to be prudent. And we have to have a prudent risk management. And that’s what the firm did.”

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Robinhood says it temporarily curbed buying of some securities as deposit requirement increased ten-fold

FILE PHOTO: The Robinhood App is displayed on a screen in this photo illustration January 29, 2021. REUTERS/Brendan McDermid/Illustration

(Reuters) – Online broker Robinhood, one of the hottest venues in this week’s retail-trading frenzy, said it put temporary buying restrictions on a small number of securities as clearing house-mandated deposit requirements for equities increased ten-fold.

“….the required amount we had to deposit with the clearing house was so large – with individual volatile securities accounting for hundreds of millions of dollars in deposit requirements – that we had to take steps to limit buying in those volatile securities to ensure we could comfortably meet our requirements,” it said in a blog post late on Friday.

Robinhood’s fee-free and simple-to-use app has made it popular with a new generation of small-time traders and its restrictions on Thursday drew a heavy backlash from high-profile politicians and celebrities.

Retail investors using Robinhood and other apps drove the so-called “Reddit rally” that pushed up shares of GameStop Corp and other companies championed on social media platforms including Reddit, resulting in heavy losses for big hedge funds that had shorted the shares.

Reporting by Rama Venkat in Bengaluru; Editing by Raju Gopalakrishnan

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Robinhood raised $1 billion from investors to handle trading surge: NYT

  • Robinhood raised $1 billion from existing investors this week.
  • The trading platform is struggling with a surge in trading of some stocks, including GameStop.
  • Earlier Thursday, the firm also borrowed “several hundred million dollars” from banks.
  • Visit Business Insider’s homepage for more stories.

Robinhood raised $1 billion from its existing investors this week, The New York Times reported.

The firm is struggling to handle a surge in trading on the platform involving a number of stocks that have been the target of short squeezes, driven largely by the WallStreetBets Reddit forum, a group of retail traders that helped drive up the share prices of GameStop and AMC Theaters, among others.

Robinhood CEO Vlad Tenev said Thursday that the company did not have liquidity issues, after Bloomberg reported that the firm had borrowed “at least several hundred million dollars” from banks amid the trading chaos.

Read more: How hedge funds are tracking Reddit posts to protect their portfolios after the Wall Street Bets crowd helped tank Melvin Capital’s short positions

The trading platform also temporarily stopped purchases of certain stocks, sparking outrage from lawmakers and business leaders.

In an email sent to Robinhood users on Thursday, the company said limited purchases of those stocks would be allowed on Friday, but that it would continue to “monitor the situation and may make adjustments as needed.” 

“To be clear, the decision was not made on the direction of any market maker we route to or other market participants,” the statement continued. 

Robinhood was still in need of more cash to avoid implementing further trading restrictions, two sources told The Times.

The privately-held company’s investors include venture capital firms Sequoia Capital and Rabbit Capital, both of which provided additional funding Thursday, The Times reported.

“This is a strong sign of confidence from investors that will help us continue to further serve our customers,” a spokesperson for Robinhood, told The Times.

On Thursday a dozen House Republicans sent a letter to the head of the Securities and Exchange Commission calling on it to investigate possible collusion between Robinhood and any hedge funds. 

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Apple down in after hours trading despite posting big beats on revenue, EPS

Bloomberg

Reddit Day Trader Army Fattens Fortunes of the Super-Rich

(Bloomberg) — A horde of traders on Reddit that see themselves as sticking it to the establishment by hunting for heavily shorted stocks is adding billions to the wealth of some of the world’s ultra-rich.Larry Chen, chairman and chief executive officer of GSX Techedu, saw his fortune increase $4.2 billion Wednesday as U.S. depository shares of the Beijing-based online tutoring company rose 36%, pushing his net worth to $15.6 billion on the Bloomberg Billionaires Index.Fellow Chinese billionaire Wang Jianlin’s wealth surged by $773 million through his stake in AMC Entertainment Holdings Inc. A flood of retail traders caused the stock to spike as much as 310% even as the broader market slumped. Hedge funds such as Mudrick Capital, which owned 4.6 million shares in the cinema operator as of Jan. 4, also got a boost.Chewy Inc. co-founder Ryan Cohen added about $1.8 billion with his holding in GameStop Corp., the video-game retailer that has surged more than 1,700% this year. Fellow investor Donald Foss, founder of subprime auto lender Credit Acceptance Corp., now owns a stake worth about $1.2 billion, according to the Bloomberg index.Even the head of Tootsie Roll Industries Inc. benefited, with CEO Ellen Gordon’s fortune rising $185 million as the confectioner’s shares rose to a record, while National Beverage Corp. founder Nick Caporella saw his net worth jump $1.8 billion to $6.8 billion as shares of the maker of LaCroix soda water climbed 40%.Meteoric RallyDay traders have been piling into previously unloved tickers favored by short sellers in recent sessions, driving them to record highs. The meteoric rally of GameStop has already worn down some institutional investors, with Melvin Capital closing out its short position by Wednesday.The hunt for heavily shorted stocks is being led by the Reddit forum WallStreetBets, which boasts roughly 2.8 million members. Some of the more outspoken have taken an activist stance, portraying their campaign as taking a stand against such societal problems as financial inequality and generational injustice.Gordon owns just over half of Tootsie Roll Industries’ common shares and 81% of its B shares, according to company filings. Her stake in the maker of Tootsie Pops, Junior Mints and Dubble Bubble gum, which she owns both directly and on behalf of other family members, is now worth $1.8 billion.Cohen disclosed an investment in GameStop in August. By December, he’d purchased 9 million shares in the retailer for a total cost of $76 million and now holds a stake worth about $3.1 billion. GameStop shares rose 135% to a record $347.51 in New York after triggering three volatility halts.Wang, the founder of closely held conglomerate Dalian Wanda Group, now owns a stake worth about $1 billion in AMC, which climbed to $19.90 in New York trading, the most since October 2018. Wang has a net worth of $14.4 billion, according to the Bloomberg Billionaires Index.(Updates gains starting in the second paragraph.)For more articles like this, please visit us at bloomberg.comSubscribe now to stay ahead with the most trusted business news source.©2021 Bloomberg L.P.

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Seth Rogen and Ted Cruz have been trading insults on Twitter for days now.

Seth Rogen apparently really wanted to let Sen. Ted Cruz he thinks he’s a “fascist” so he fired off a tweet. But rather than simply ignore it, the Texas senator answered back and the two have been trading insults on Twitter for days now.

It began when Cruz sent out a tweet criticizing President Joe Biden’s decision to rejoin the Paris Agreement to tackle climate change. That tweet got plenty of ridicule for the senator’s wording considering he wrote that Biden’s move demonstrates the new president is more interested “in the views of the citizens of Paris than in the jobs of the citizens of Pittsburgh.” Rep. Alexandria Ocasio-Cortez, for example, quipped: “Quick question: do you also believe the Geneva Convention was about the views of the citizens of Geneva?” Rogen, however, didn’t get into the nuances of Cruz’s wording and had a simpler message: “Fuck off you fascist.”

Cruz seemed all too eager for a public spat with a Hollywood celebrity. The senator took a screenshot of Rogen’s reply and wrote: “Charming, civil, educated response @Sethrogen.” He went on to say that the response illustrated how the Democratic Party is for Hollywood celebrities while Republicans represent workers. Rogen responded:

And he didn’t stop there, the actor kept going, even making a reference to an insult that Donald Trump lobbed at Cruz while they were both running for president and pointing out that as someone who works in movies, he’s in a lot of unions:

Rogen then retweeted a video of a Pittsburgh official criticizing Cruz, once again insulted the senator and said he was having fun bashing the lawmaker “now that I know he’s for sure seeing my tweets”:

Rogen then grabbed on to a tweet in which Cruz said Fantasia was the first movie he saw in theaters, to bash the senator again:

Cruz picked up the bait and said Rogen behaves “online like a Marxist with Tourette’s”:

Rogen criticized Cruz for using a medical condition as an insult and took it as an opportunity to educate the senator on Tourette’s before calling him a “fucking fascist” again:

In case the message wasn’t clear, Rogen later called Cruz a fascist once again:

Cruz obviously wasn’t going to leave it there and called Rogen a “moron”:

Rogen then said Cruz “literally inspired a deadly insurrection”:

As news of the tweets started spreading, Rogen took issue with the way many were characterizing it as a “feud”:

He went on to say that Cruz has blood on his hands:

Rogen also retweeted several supporters, including one who said Cruz was quicker to reply to the Hollywood celebrity than his own constituents. Another said Cruz was eager to keep the spat going so people would talk about that rather than his role in sparking the Capitol riot.

Other Hollywood celebrities got involved too. Rogen’s friend Joseph Gordon-Levitt also jumped in and said the senator’s actions were “reminiscent of supporters of Hitler, Mussolini, and others.”

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