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US lawmakers quiz key GameStop players
Notorious retail investor Keith Gill is facing a grilling from the US congress and the possibility of a class action lawsuit due to his alleged part in the GameStop saga, with policymakers convinced he is far from an amateur stock picker.
US lawmakers quiz key GameStop players
Notorious retail investor Keith Gill is facing a grilling from the US congress and the possibility of a class action lawsuit due to his alleged part in the GameStop saga, with policymakers convinced he is far from an amateur stock picker.
Last month, retail investors coordinated on WallStreetBets to buy up shares belonging to video game retailer GameStop – a brick-and-mortar retail chain that had been heavily shorted by Wall Street hedge funds.
Now the US congress is looking into the phenomenon that reportedly saw Mr Gill pocket multimillion-dollar gains, with Mr Gill expected to join executives from Robinhood, Citadel, Melvin and Reddit to testify before the financial services committee on Thursday.
According to a prepared testimony for his Congressional appearance, Mr Gill is due to deny any wrongful allegations, including that he did not “solicit anyone to buy or sell the stock for my own profit”.
“I did not belong to any groups trying to create movements in the stock price. I never had a financial relationship with any hedge fund,” he stated.
“I had no information about GameStop except what was public. I did not know any people inside the company, and I never spoke to any insider.”
Although unclear how much money Mr Gill made off GameStop, his testimony said that he and his family were “millionaires” when the stock reached US$20 in December – well below the US$400 a share it would later hit.
But according to Mr Gill, he began posting about GameStop, having perceived it was an undervalued equity.
“GameStop’s stock price may have gotten a bit ahead of itself last month, but I’m as bullish as I’ve ever been on a potential turnaround,” he said.
In short, he added, “I like the stock”.
Mr Gill continued to explain that the prevailing analysis about GameStop’s impending doom was “simply wrong”.
“Two important factors, based entirely on publicly available information, gave me and many others confidence that GameStop was undervalued in 2019 and 2020. First, the market was underestimating the prospects of GameStop’s legacy business and overestimating the likelihood of its going bankrupt.”
“Second, I believed – and I continue to believe – that GameStop has the potential to reinvent itself as the ultimate destination for gamers within the thriving $200 billion gaming industry,” he explained in a pre-submission to Congress.
Trading platform Robinhood is also expected to deny that it acted in the best interests of hedge funds when it suspended GameStop trading.
“Any allegation that Robinhood acted to help hedge funds or other special interests to the detriment of our customers is absolutely false and market-distorting rhetoric,” Vladmir Tenev, CEO of Robinhood, said in a statement prior to the hearing.
Despite key lawmakers slamming Robinhood for its actions, Mr Tenev insisted his company had little choice but to suspend buying.
He is expected to provide extensive detail on how the firm had to come up with billions of dollars of extra collateral within days to meet regulatory requirements.
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