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"The would-be plaintiff representing investors in the case, Christian Iovin of Washington state, sold $200,000 worth of call options on GameStop shares when the stock was below $100. The stock quickly eclipsed $400 a share, forcing him to buy the calls back at elevated prices."
He's being sued by someone who sold naked call options and got burned. This case is going nowhere.
I'd love to start suing people for every time I take a loss while trading.
> “Gill’s deceitful and manipulative conduct not only violated numerous industry regulations and rules, but also various securities laws by undermining the integrity of the market for GameStop shares,” the suit said. “He caused enormous losses not only to those who bought option contracts, but also to those who fell for Gill’s act and bought GameStop stock during the market frenzy at greatly inflated prices.”
As a regular person (with perhaps a higher-than-average exposure to various hazardous memes), this claim look bizarre. Taking out adjectives, a part of this reads:
"Gill's <adjectives> conduct not only violated <blah> regulations and rules, but also various securities laws by undermining the integrity of the market for GameStop shares"
How do I read this?
> Gill's conduct violated regulations and rules.
> Gill's conduct undermined the integrity of the market, and therefore violated various securities laws.
Was it really Gill's conduct that undermined the integrity of the market? It doesn't look like that to me, but IANAL.
As for his conduct violating regulations and rules, I'd really like to read these regulations and rules that govern how someone is expected to conduct themselves on r/WSB and youtube.
Here are the rules for registered investment advisors.[1]
This was a pump and dump. Those have been around since at least the 19th century. Older ones involved newspapers and newsletters. Newer ones involve social media. The SEC fines people for this regularly. This time, the suckers were people who hadn't seen this a few dozen times yet.
[1] https://www.sec.gov/divisions/investment/iaregulation/memoia...
I have seen a lot of protests defending Gill.
I think there is another side to the story though with many people who lost money buying the stock (selling options is different) based on his advice. Gill is held to a much higher standard than a normal person as he is a licensed security broker.
If you look at my comment history on HN, you will see at the time I was pointing out a lot of Redditors were engaging in a pump and dump scheme. Pump and dumps are illegal and regulated by the SEC. If Gill, a licensed security broker, is found to have been a part of this he could end up losing.
Selling naked call options on a meme stock no less(assuming he sold them after the Reddit hype train started).
Also selling 200k worth meant he would have made it out like a bandit if the bet succeeded. I wonder what his net worth is if the broker allowed him to be leveraged so much?
there is max fixed gain when selling a call, right ?
Who in 2021 thought naked calls are a good idea?
A lot of people who think that buying puts is ,,too expensive''.
Nassim Taleb made money by understanding that out of money call options were underpriced, not overpriced how people think generally. People don't learn from the past.
Indeed, there's no meat to the suit detailed.
Still, though. The fact that DeepFuckingValue just turns out to have been a licensed broker complicates the narrative quite a bit. Needless to say he can be expected to have known that the whole short trading theory of "Hold the Line" was bunk, and did nothing to disabuse the community of it.
I say it every time this comes up: this guy's criminal exposure is really significant. I find the idea that he Just Happened to stumble on a tulip bubble and had nothing to do with encouraging it just too much to believe. What we know of his public postings doesn't rise to criminal behavior, but then we don't know what sock puppets he might have been operating or what trades he was making privately.
And the incentives all point to this guy being guilty of securities fraud.
But no, this suit isn't going anywhere.
I posted an eerily similar comment to this on Reddit.
Yeah, the suit is BS, but the fact that he's a licensed broker really shifts the narrative a bit and makes you start to question things. It's no longer "Johnny Everyman finds Picasso painting at yard sale", it's now "Museum curator finds Picasso painting at yard sale".
I've been an active member of WSB for more than 5 years now and I've followed this story since the beginning. Based on his YouTube channel and some other things, I still think DFV is just a dude who stuck to his convictions and got insanely lucky, but I'm less certain of that than I was last week.
I don't think this suit will go anywhere, but I wouldn't be surprised theres a few twists left in this story.
> find the idea that he Just Happened to stumble on a tulip bubble and had nothing to do with encouraging it just too much to believe.
He was long gamestop and published his reasoning to the internet with explicit disclaimers before each video. When his bet started to pay off, people started to hop into the trade.
How is this materially different than any other firm or person that gives price targets or argues in favor of a position?
If you watched r/wallstreebets during this whole thing there was a lot of stuff going on; people saying things, people buying advertisements and billboards, people explicitly encouraging market manipulation... there was a lot going on which could easily be marked as securities fraud.
I agree with your "can't sue over loss of trading", but that's not to me the problem.
If he is a professional, Gill is in trouble. When I was working in capital markets, my contract stipulated that I had to disclose any trading activity to my employer. That's because, for example, I could be using insider information to conduct some trades privately, which is unethical and illegal. Or I could bet against the bank. Etc. I can't remember how many trainings I had regarding what I could do and not do in terms of trading privately.
Pretty sure that teasing masses on Reddit would have had me fired.
You can, this is America :)
You may not always win though.
I wouldn’t be so sure. Yes it’s ridiculous to sue after doing something so stupid, however if it’s true that he’s a registered financial advisor, he may not get out of this Scott free.
The Tasty Trade guy did something similar but then
sold the strangle and sold vol for 600% and bought it back at 400% and managed to cancel out his losses.
that guy is an options trading ninja.
I find it nauseating seeing the financial press, politicians and big time players claiming that their actions and ‘concern’ is based on not wanting retail investors to lose money as a stock peaks. Be honest, you don’t give a shit and even if this was your motivation, people have autonomy in the markets, although sometimes naive, they know the risks. Stop treating retail investors as children that need saving when in reality you got burned. wolves in sheep’s clothing comes to mind
While big players systematically game things to put retail at a disadvantage every day and nobody complains.
They are only taking action because they have an easy target they can score some political points on and who won't fight back
The internet is full of vaguely conspiratorial takes involving 'elites' and I believe it has more to do with internet culture than the facts behind the 2008 financial crisis alone.
A theory recently occurred to me that I think is part of the explanation:
The rise of blogs and sites like Youtube gave independent journalists reach. Independents vastly outnumber people working in mainstream media. Yet mainstream media has more resources, more access to experts and higher production values.
So how can some rando with a webcam convince the public to watch them instead of watching 60 Minutes or reading the NYT? They can do it with the 'elites' narrative: 'Read my blog because the MSM is a tool of the elites and they only tell lies!'
And soon enough the only mainstream journalists the internet trusts are the ones who demagogue like Glen Greenwald or Tucker Carlson.
But as to the actual comment to which I am replying: it seems like the 'retail investors' who lost money on this WSB thing are suggestible marks. They enriched the kind of 'elite' they hate so much because they believed what they read on Reddit.
So it's probably good, in future, if someone treats them as children and protects them from themselves.
If the financial press really wanted to profit from feigning concern, they would have just parroted the populist narrative just like Elon Musk or Mark Cuban.
>people have autonomy in the markets, although sometimes naive, they know the risks.
Why? Because they ticked the "I'm an experienced options trader" box? This guy did, but clearly didn't understand how options worked.
Why is he always referred to as 'Roaring Kitty' from youtube when he is undoubtedly better known as DeepFuckingValue from reddit? Because of the `F-Word`?
It will be interesting how congress will refer to him during the hearings, considering that reddit also has to appear and not youtube, so his alter ego DeepFuckingValue should be in focus?
They should have used his real name, if they don't like fucking.
> Why is he always referred to as 'Roaring Kitty' from youtube when he is undoubtedly better known as DeepFuckingValue from reddit?
Makes sense for this case. Public messaging versus publicly visible but arguably private conversation.
I would imagine he would appear under his real name. It would be weird to hear his username in Congress, especially when there are no longer concerns about anonymity now that his name is publicized.
The lead plaintiff of the lawsuit sold $200K in call options with a $100 strike, and got cleaned out by a margin call when the stock hit $400.
There is no cure for stupid.
The plaintiff sold 200k worth of naked calls and got margin called. What kind of a hack law firm would represent such an idiot?
Probably some firm in Eastern District of Texas
That URL now redirects to bloomberglaw.com home page for some reason, but now there's this story:
https://news.bloomberglaw.com/securities-law/roaring-kitty-s...
No way this is happening for real...he's suing /u/DeepFuckingValue because he took a loss trading?
Then what's next? Suing your state's DoT every time you get a flat on the road?
You can actually do this in some cases....
I mean, frivolous lawsuits are nothing new: https://www.thebalancesmb.com/most-ridiculous-lawsuits-of-al...
They usually get tossed out pretty quickly.
"In 2016, an Illinois man sued Starbucks for misrepresenting the amount of liquid contained in its cold drinks. ... The judge agreed with Starbucks' argument that a reasonable consumer who orders an iced drink expects the drink to contain both liquid and ice."
As Matt Levine always says "Everything is securities fraud."
Is your post meant to be ironic?
Is this why people want to be able to stay anonymous on the Internet, I wonder?
I’ve said this elsewhere, but because he had been readily deanonymized I expect everyone to target him instead of any other Reddit account.
Selling calls on a meme stock in the middle of a short squeeze looks quite stupid to me. Especially naked calls, you're just asking to getting your face ripped off, and that's exactly what happened, and this guy is trying to shift the consequences of his dumb moves to a scapegoat.
There's really nothing redeeming about this lawsuit. Shame that Keith has become the focus of this show when really he did nothing wrong, it's just that he became the face of the squeeze and dumb people want to ascribe responsibility to him.
I guess it's a cautionary tale about coming out publicly, you become the target of very petty people. I hope the SEC does its job and goes after all the naked short selling and investigates all the failures to deliver that preceded the squeeze. But I'm cynical.
Great, sounds like more material is coming for the movies.
I'd start by suing Black, Scholes, and Merton.
I doubt this lawsuit is going anywhere, but I wouldn't be surprised at all if this guy ends up in front of a judge at some point down the road. I really question his decision to come forward. Don't see what it gained him aside from the adulation of thousands of bots on r/WSB.
He didn't "come forward", other Reddit users made him their god (especially the 6 million new users of the sub), he was just posting his positions and commentary so others could learn. He became famous because he was in it long before anyone else and thus his gains got big.
Someone else said it, but he didn't "come forward." He's been posting about his GME position on WSB and his YouTube channel since 2019. You can literally go and watch the videos yourself. This is just an investor who enjoys sharing his due diligence with other investors, who ended up being absolutely right (and going viral because of it).
The plaintiff should be smart enough to know most blog posts are pumps.
It is your position that the existing laws and regulations against certain kinds of pump-and-dump shouldn't exist, because instead everyone should just be smart enough to know that it happens pervasively?
hmm Why aren't they suing the Fed?
Oh nobody liked this post either.
Cuz you all just don't get it. lol