What to Expect: Redditor Summoned to Congress Over GME Saga
In the aftermath of Reddit’s short squeeze of GME stock, Keith Gill, a.k.a. known by his Reddit username Deepf—ingvalue (modified for profanity), is under investigation and is due to appear at congress. However, the involved hedge funds might get preferential treatment.
GME Saga Meets US Congress
Redditor Keith Gill, a key proponent of the recent GameStop short squeeze movement originating on the Reddit WallStreetBets forum, has been targeted in an upcoming hearing that will see multiple stakeholders in the GameStop trading saga testify before congress on February 18.
In a live interview aired February 3, Chairwoman of the House Financial Services Committee Rep. Maxine Waters announced her intent to invite Gill — better known by his Reddit username Deepfuckingvalue — to testify at a hearing that will see Congress investigate potential market manipulation in the GameStop short squeeze.
The hearing, announced on January 28, focuses on addressing potentially predatory and manipulative market manipulation, the market impact of “gamifying” securities trading through online trading platforms, and the high level of market volatility caused by hedge fund conduct labeled by Waters as “unethical.”
In statements released to Bloomberg, Waters cast a wide net over the WallStreetBets GameStop fiasco, noting that Redditors, Robinhood stakeholders, and multiple hedge funds would be requested to testify:
“I’m trying to get everybody that has a role to play. I want Reddit there. I want Robinhood there. I even want GameStop there. And I want a couple of the hedge funds there.”
In addition to Gill, Waters specifically called out both Citadel and Melvin Capital, two major hedge funds embroiled in the social media driven short squeeze that saw the GameStop stock price increase in value by over 8,000% in the last six months, reaching an all-time high of $347 on Jan 27th.
Hedge fund Melvin Capital Management has incurred a 53% loss in January, betting against retail trader fervor led in part by Gill, a frequent poster on the Reddit WallStreetsBet forum and operator of the RoaringKitty Youtube channel. However, since the short squeeze was a decentralized effort, no one has been able to accuse Gill of market manipulation, and many members of congress are supporting the Redditors in this legal argument.
WallStreetBets Redditor Under Investigation
Gill’s participation in the GameStop stock saga hasn’t gone unnoticed by US regulators. While Gill is celebrated as vanguard promoter of the grassroots action against hedge funds on the WallStreetBets Reddit forum, regulatory bodies are taking notes — securities regulators in Massachusetts are currently investigating Gill’s involvement in the securities market.
Gill, who is a registered securities broker, has captured the attention of Massachusetts’ secretary of the commonwealth William Galvin, with the office of the Secretary of the Commonwealth corresponding with Gill’s former employer, Boston-based insurance company MassMutual.
The Massachusetts regulator is currently investigating the legality of Gill’s social media interactions with the WallStreetBets community, noting that licensed securities brokers have an “obligation” to notify employers of outside activities.
Regulators Target Social Media Posts, Seemingly Overlook Hedge Funds
Gill’s posts encouraging grassroots action against major Wall Street hedge funds, made while still technically employed as a financial wellness education director, are currently subject to close scrutiny by regulatory bodies — prompting many retail investors to speculate on potential double standards.
While Gill’s interactions with the Reddit WallStreetBets community appear to present a relatively innocuous statement of preference for the GameStop stock, the WallStreetBets community have rapidly pointed out similar statements published by hedge fund managers that, in the eyes of retail investors, are far more egregious.
Bill Ackman’s March 2020 TV appearance has emerged as a central talking point in discourse focused on the GameStop stock push, juxtaposing the social and market impact of retail investors with smaller audiences versus major Wall Street personas.
Ackman’s 2020 CBNC appearance, in which the Harvard-educated hedge fund manager appeared on national television before millions of Americans to deliver a doom-laden interview on the dire economic impact of the COVID-19 pandemic, predicting that the market would “go to zero” amidst millions of virus-related deaths.
“America will end as we know it. I’m sorry to say so, unless we take this option … We need to shut it down now. … This is the only answer.”
Ackman’s bearish outlook caused a 2,000-plus drop in the Dow Jones Industrial Average overnight, prompting Forbes to label the broadcast as the “billionaire interview that tanked the Stock market”.
Ackman’s doomsday prediction, however, was discreetly mirrored by the Pershing Square hedge fund manager’s market position — by quietly placing a variety of default swap bets on tanking markets, Ackman generated profits of over $2.6 billion in a single day.
Regulators were quick to overlook Ackman’s potential involvement in market movements subsequent to the now-infamous CNBC appearance, with the hedge fund manager stating in follow up announcements that any suggestion of media appearances moving markets was a “highly dubious assertion”
Despite naming Gill specifically as a potential ringleader of the GameStop short squeeze, Rep. Maxine Waters has yet to specifically call in any executives of Citadel, Melvin Capital, or Robinhood to the upcoming Congressional Hearing. Gill, if attending, will present testimony to congress alongside key Wall Street Stakeholders on February 18.
Disclosure: Tim Fries has no positions in any of the stocks mentioned, and has no plans to initiate any positions within the 72 hours following the publishing of this article. This article expresses the opinions of Tim Fries. Tokenist Media LLC has no position in any of the stocks mentioned, and does not plan to initiate any positions within 72 hours of the publishing of this article. Please consult our website policy for more information.