Roaring Kitty Returns, GameStop Soars, GameStop Shorts Getting Hammered

GameStop Soars as Roaring Kitty Rekindles Meme Stock Mania

GameStop’s share price skyrocketed on Monday after the man who became the face of “meme stock” mania in 2021 with his enthusiastic promotion of the struggling video game retailer emerged from a three-year hiatus.

On Sunday evening, Keith Gill, the trader known on some social media platforms as Roaring Kitty, posted an illustration of a person holding a video game controller while leaning forward on a chair on X. On no other news, GameStop’s stock more than doubled in early trading, prompting several temporary volatility-related halts by the New York Stock Exchange. The shares were up about 74 percent at the close, adding billions in market value in a matter of hours.

SEC Charges Florida Man in Fraudulent “Free-Riding” Scheme

The Securities and Exchange Commission announced today that it charged 25-year-old Tyrone Johnny Lacy, Jr. (“Lacy”) of Sefner, Florida with conducting a fraudulent “free-riding” scheme in which he took advantage of credits offered by certain broker-dealers to buy over $300,000 in securities without having funds to pay for them.

The SEC’s complaint alleges that, from at least October 1, 2022 to October 26, 2022, Lacy used a falsified brokerage account application and sham deposits from bank accounts with minimal funds to induce two broker-dealers to provide “instant buying power” credit allowing Lacy to purchase securities. According to the complaint, before Lacy’s fraudulent deposits were reversed due to insufficient funds in his bank accounts, he used the credit extended to him by the broker-dealers to purchase approximately $331,700 in securities. Lacy allegedly withdrew approximately $1,600 in trading profits and left one broker-dealer with a loss of approximately $1,500.

Everything is securities fraud

I think sometimes about starting a spinoff Everything Is Securities Fraud newsletter that is just a weekly list of cases, with links but no other content. There’s not much to say about them at this point, but they do keep happening. Two big ones from last week:

— “Boeing’s Safety Claims Probed by SEC After Panel Blew Off Plane.”

— “In Tesla Autopilot probe, US prosecutors focus on securities, wire fraud.”

If someone is killed in a car crash, what is that? Why that’s securities fraud. If a door flies off a plane in mid-air, what’s that? That, too, is securities fraud. Creating substantive regulations and deterring misconduct in the real world is messy and complicated, but in the abstract world of finance, everything is securities fraud.

Ex-Nuveen Trader Should Get 70 Months for Insider Plot, US Says

Former Nuveen LLC trader Lawrence Billimek should spend almost six years behind bars for front-running the firm’s trades as part of a $47 million insider-trading scheme, US prosecutors told a federal judge.

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Billimek, 53, pleaded guilty in November to passing tips about planned Nuveen stock purchases over a six-year period to retiree Alan Williams, who would then acquire the shares ahead of the asset management giant. Williams pleaded guilty two months before Billimek and is scheduled to be sentenced this fall.

The case was one of the first in which the US Securities and Exchange Commission’s Consolidated Audit Trail — a controversial database tracking almost all US market activity — was credited with catching insider traders.

Tesla threatened to fire law firm in bid to block Musk pay critic – court document

A Delaware law professor accused Tesla on Monday of threatening to fire one of its longtime law firms if he proceeded with plans to file a friend-of-the-court brief criticizing the company’s bid to restore CEO Elon Musk’s $56 billion pay package.

Retired professor Charles Elson of the University of Delaware alleged in a legal filing that Holland & Knight, for which Elson has worked for nearly three decades as a consultant, told him that Tesla said it would end its relationship with the law firm unless Elson abandoned plans to submit his brief.

Tesla’s tactic was “extraordinary and appalling,” Elson said in the filing, which seeks permission from the court to submit the brief.

After he learned of the electric carmaker’s alleged threat to Holland & Knight, Elson said in the filing, he resigned from his consulting arrangement “to protect that firm from retaliation while upholding the important principle of academic freedom.”