E*Trade (MS) is considering banning Keith Gill, also known as "Roaring Kitty," from its platform due to concerns about potential stock manipulation related to his recent purchases of GameStop (GME) options. Shortly before Gill reignited interest in meme stocks in May, he bought a large volume of GameStop options on E*Trade. Gill's posts on social media showcasing his significant holdings in GameStop have led to a surge in the stock's price, raising questions about the potential for market manipulation.
The stock of GameStop surged by 21% on Monday following Gill's posts, illustrating his influence as an online stock market leader. This has led to internal discussions at E*Trade and its owner, Morgan Stanley, about the legality and implications of Gill's actions. The Securities and Exchange Commission (SEC) and the Massachusetts securities division are also reviewing the situation to determine if any regulatory action is warranted.
Market Overview:- E*Trade is considering banning Keith Gill over concerns of stock manipulation.
- Gill's recent posts have caused significant volatility in GameStop shares.
- Regulatory bodies, including the SEC, are reviewing the situation.
- Gill, also known as "Roaring Kitty," has a substantial following and influence on meme stocks.
- GameStop shares surged by 21% following Gill's recent posts on social media.
- E*Trade and Morgan Stanley are debating the legality and potential consequences of banning Gill.
- The outcome of regulatory reviews by the SEC and Massachusetts securities division remains uncertain.
- E*Trade and Morgan Stanley face a delicate decision on whether to ban Gill, balancing potential backlash from the trading community.
- The situation highlights the ongoing concerns about market manipulation and the influence of social media on stock prices.
The debate within Morgan Stanley about Gill's actions started about three weeks ago when an account associated with Gill posted on social media after a three-year hiatus. This triggered a surge in demand for GameStop and other meme stocks, causing E*Trade's systems to crash temporarily. The company is now faced with the challenge of managing Gill's influence while adhering to regulatory standards and maintaining customer trust.
Gill, who has previously worked as a registered broker, has a history of significant influence on stock prices through his social media presence. His followers have swelled to over a million, demonstrating his ability to move markets. The current situation poses a complex challenge for E*Trade and Morgan Stanley as they navigate the potential regulatory and reputational risks associated with Gill's trading activities.
