Welcome to the wild world of Wall Street, where the elite financial institutions play a game of high-stakes poker with the stock market, confidently knowing the house always wins. It’s a place where “market manipulation” is a dirty word—unless, of course, you’re the one doing the manipulating. When the tables turn, and the little guys start fighting back, those very same titans of finance who rig the game suddenly cry foul. This tale of hypocrisy and greed was never more evident than in the saga of Keith Gill, aka Roaring Kitty, and the army of retail investors who decided to make GameStop their battleground.
Entities like E*Trade and its overlord, Morgan Stanley, have reportedly considered shutting Roaring Kitty’s account down. Yes, Morgan Stanley, the same multinational investment bank that’s no stranger to being accused of bending the rules, now positioned itself as the guardian of market integrity. The hypocrisy would be laughable if it weren’t so infuriating.
Let’s pause and savor the irony here. E*Trade, along with its corporate master Morgan Stanley, is ostensibly concerned about “stock manipulation.” This is from an industry where the term “pump and dump” isn’t a cautionary tale, but a Tuesday afternoon. When Roaring Kitty orchestrates a rally that leaves hedge funds clutching their pearls, it’s market manipulation. When the suits engineer a short squeeze for profit, it’s just business as usual.
Roaring Kitty is the unlikely hero in a financial drama that captivated the world. Known online as Roaring Kitty, Gill isn’t your typical Wall Street player. He’s an independent investor with a knack for picking stocks and a penchant for sharing his insights on YouTube and Reddit. But when Gill set his sights on GameStop, a company teetering on the brink of bankruptcy and under relentless attack by short sellers, he inadvertently lit the fuse on a powder keg of small investor rebellion.
The GameStop saga was supposed to be a footnote in the annals of financial history. But Gill’s enthusiasm and the fervor of retail investors turned it into a full-blown insurrection. Thousands of small-time traders, tired of being pushed around by the big boys, rallied behind Gill’s battle cry to “stick it to the man.” And for a brief, shining moment, in 2021, they did just that, driving GameStop’s stock price to dizzying heights and inflicting billions in losses on the hedge funds betting against the company.
Predictably, the masters of the financial universe didn’t take kindly to this populist uprising. When the GameStop stock soared, the big players howled in indignation. The very institutions that manipulate markets with impunity—engaging in practices that would make Gordon Gekko blush—suddenly decried the actions of the retail investors as reckless and dangerous.
Keith Gill’s rise to prominence didn’t just make him a hero to the masses; it made him a target for the establishment. Reports surfaced that powerful entities were zeroing in on him, ostensibly to protect the sanctity of the financial markets. But let’s be real—this was about preserving their own hegemony.
By painting Gill and his fellow GameStop enthusiasts as rogue elements threatening the stability of the market, the financial behemoths hoped to regain control and continue their exploitative practices unchallenged. They couldn’t afford to let the precedent stand: that ordinary people, armed with information and a bit of courage, could outplay them at their own game.
According to insider gossip (courtesy of The Wall Street Journal), E*Trade is seriously mulling over whether to banish Roaring Kitty from its platform. The reason? Fears of stock manipulation, a crime so heinous it’s typically reserved for hedge fund titans and Wall Street wizards—not, God forbid, a retail trader who decided to fight fire with fire.
Gill’s latest sin? Acquiring a boatload of GameStop options through E*Trade just in time to light another meme-stock bonfire this May. Over the past weekend, our fearless feline flaunted an E*Trade account screenshot, boldly displaying his $115.7 million in stock and freshly-minted options, with a tidy $6.86 million gain. Naturally, this sent the financial overlords into a tizzy.
For those not in the loop, Roaring Kitty is no ordinary market dabbler. His rise to meme-stock messiah began back in 2019, when he started dropping YouTube videos extolling the virtues of a beleaguered retailer called GameStop. His enthusiasm wasn’t just infectious; it was revolutionary. Gill’s deep dives and straightforward charm won him a legion of followers, transforming him into the Pied Piper of retail investors.
Gill’s journey from obscure YouTuber to market influencer isn’t just a personal triumph; it’s a seismic event in the financial world. With over a million followers on the social media platform X, his reach and impact are undeniable. He’s turned the tables on the financial elites, using their own tools against them, and in doing so, he’s exposed the deeply entrenched double standards of Wall Street.
Gill’s influence is indisputable. After his recent posts, GameStop shares closed up 21% on Monday. To put it mildly, when Roaring Kitty talks, the market listens—much to the chagrin of those who’ve grown accustomed to rigging the game without any pesky interference from the plebeians.
In the world of hedge funds, it’s common practice to broadcast stock picks, market forecasts, and trading strategies far and wide. Financial analysts and short sellers regularly release reports designed to move markets, their influence as tangible as the millions they stand to gain or lose. These reports, often framed as dispassionate analysis, are anything but. They are strategic weapons, crafted to benefit the positions of those who wield them.
Consider this: when a hedge fund titan announces a significant stake in a company, it’s seen as a masterstroke, a signal for others to follow. The resulting influx of investment can send stock prices soaring, further enriching the initial investor. Conversely, when these moguls publicly declare their short positions, it triggers sell-offs, driving prices down and padding their pockets with the ensuing profits.
The Double Standard Exposed
The hypocrisy becomes glaring when comparing these maneuvers to the actions of someone like Keith Gill. Hedge funds using their influence to sway markets is accepted as savvy business; an individual investor doing the same is labeled as disruptive. Gill’s deep dives into GameStop and his subsequent promotion of the stock weren’t fundamentally different from what hedge funds do—except for one crucial difference: he was a lone wolf, a retail investor armed with knowledge and a platform.
Gill’s rise to prominence wasn’t just about making money; it was a direct challenge to the established order. When GameStop shares surged due to his advocacy, it was a wake-up call to the financial elites. Here was someone outside their club, using their playbook, and winning. Naturally, the reaction was swift and fierce. E*Trade and its corporate overlord Morgan Stanley, champions of free market principles until they aren’t, began deliberating Gill’s fate on their platform, casting him as a potential manipulator.
According to the WSJ, about three weeks ago, the bank initiated a review of Gill’s activities, suspicious of his influence over the meme-stock frenzy. On May 12, Gill posted a picture on his X account, reigniting interest in meme stocks. The next day, when many people were trying to get in on it, E*Trade’s system interestingly crashed. The WSJ report said the hours-long outage was caused by “internal issues.”
Morgan Stanley’s scrutiny of Gill’s trades, particularly his purchase of call options before his influential tweet, is a classic example of the regulatory double standard. Gill’s options, set to expire this month, became lucrative as GameStop’s stock price surged post-tweet. This prompted E*Trade to investigate the legality of his actions and consider closing his E*Trade account. The irony? Hedge funds engage in similar, if not more egregious, market-swaying tactics regularly, yet face far less oversight.
This disparity isn’t confined to finance. It mirrors the broader inequities in the digital world, where tech monopolies stifle smaller developers, social media giants decide who gets a platform, and legacy media, despite waning trust, reap the benefits of Big Tech partnerships.
Examples of Institutional Influence
Carl Icahn and Bill Ackman are names that resonate with power and influence. When Ackman publicly declared a short position against Herbalife, labeling it a pyramid scheme, the stock price didn’t just dip—it experienced a rollercoaster of volatility. Ackman’s high-profile bet and relentless campaign against Herbalife sent shockwaves through the market, illustrating the immense sway a single individual can have.
Similarly, Carl Icahn’s investment moves are watched with bated breath. His decision to invest in companies like Apple and Netflix isn’t just a vote of confidence; it’s a clarion call to other investors. When Icahn makes a move, the market follows, often leading to swift and substantial increases in stock prices. His public recommendations can turn a struggling company’s fortunes around, at least temporarily, as investors rush to follow his lead.
It’s not just the activists who hold sway. Analysts from major financial institutions possess a quieter, yet equally potent power. A single upgrade or downgrade from these analysts can lead to rapid buying or selling frenzies. These ratings are market-moving pronouncements that can lead to billions in market value shifts. When an analyst at a leading bank downgrades a stock, the resulting sell-off can be brutal and immediate. Conversely, an upgrade can spark a buying spree, driving stock prices up.
These analysts and their institutions operate with a level of influence that dwarfs the impact of any single retail investor. Their assessments and ratings are treated as gospel by many market participants, creating a self-fulfilling prophecy as the masses react accordingly.
Politics, Power, and Gain
When news broke that E*Trade was contemplating banning Roaring Kitty, the hypocrisy was so thick you could cut it with a knife. It wasn’t long before observers pointed out the glaring double standard: while retail investors like Roaring Kitty face scrutiny and potential bans, politicians—who wield insider knowledge and influence over market-shifting legislation—continue trading unimpeded. The cozy relationship between politics and finance is yet another layer of the rigged game that everyday investors must navigate.
Unlike typical investors, politicians sit at the intersection of legislative power and insider knowledge. This privileged position allows them to make trading decisions based on non-public information about upcoming regulations, legislative actions, and policy changes. It’s an advantage that skews the playing field, enabling them to execute trades that ordinary investors could only dream of.
Take, for instance, the portfolio of Nancy Pelosi, which has been under the microscope for the timing of its trades in relation to legislative actions. Yet, these activities continue without the same level of scrutiny or regulatory backlash faced by someone like Roaring Kitty.
The Rules
The Securities and Exchange Commission (SEC) regulates market activities under several key regulations, notably the Securities Exchange Act of 1934, which governs the trading of securities to prevent fraudulent and manipulative practices. Yet, in the Wild West of Wall Street, these rules often seem like mere guidelines, especially for the institutional behemoths who play the game on their terms.
Rule 10b-5: A Tale of Selective Enforcement
Rule 10b-5 is supposed to be the market’s equalizer, banning any act or omission that results in fraud or deceit in connection with the purchase or sale of securities. It’s the cornerstone of legal actions against market manipulation, but its application is as consistent as a coin flip. For retail investors and smaller players, a misstep can mean severe penalties and legal repercussions. But for the institutional giants? It’s more like a friendly warning.
Institutional investors have become adept at dancing on the line of Rule 10b-5. Practices like “short and distort” — where an investor shorts a stock and then spreads negative information to drive the price down — often skirt the boundaries of legality without clear consequences. Similarly, aggressive promotion of stocks they own, while borderline manipulative, rarely leads to significant repercussions. These maneuvers, while technically falling under the purview of Rule 10b-5, frequently escape the SEC’s hammer, illustrating a selective enforcement that disproportionately impacts the smaller, less powerful players.
Regulation Fair Disclosure: Leveling the Field, In Theory
Regulation Fair Disclosure (Reg FD) was introduced to bridge the information gap between institutional investors and individual investors, ensuring that all material information is disclosed to the public simultaneously. It was a noble effort to level the playing field, but in practice, it often tilts in favor of those with deeper pockets and better legal teams.
Large investors and hedge funds, with their armies of lawyers and compliance officers, navigate Reg FD with the finesse of seasoned tightrope walkers. They exploit every nuance and loophole, maintaining their informational edge. Meanwhile, individual investors, without access to the same legal expertise and resources, are left to interpret these complex regulations on their own, often at their peril.
Roaring Kitty saying that he likes GameStop and that he’s going to buy it doesn’t appear to breach any of these rules. Kitty would have to be lying or being deceitful – like saying he was supporting a public company by buying shares while secretly selling them – for it to reach into the category of Rule 10b-5.
Traditional financial institutions and analysts reacted to the rise of influencer-driven investing with a mixture of skepticism and outright hostility. After all, these are the folks who gambled away billions in 2008 and were subsequently bailed out by taxpayers. Yet, they had the gall to claim that influencers like Gill lacked the necessary expertise and rigor. Their argument? Influencers could mislead gullible investors, inflate market bubbles, and encourage risky financial behaviors.
This pearl-clutching is nothing more than a desperate attempt to preserve their role as the gatekeepers of “responsible” investing. It’s a self-serving narrative that positions the old guard as the ultimate arbiters of financial wisdom, even as they repeatedly stumble over their own failures. Disparaging influencers serves to maintain the illusion that only Wall Street insiders are equipped to navigate the treacherous waters of finance, conveniently ignoring their own history of recklessness.
Enter the mainstream media, the dutiful lapdogs of the financial establishment. While influencers can bypass traditional channels and communicate directly with the public, the media still wields considerable power in shaping public perception. And, unsurprisingly, the media has been all too willing to cast influencers like Gill as reckless dilettantes, undermining their credibility at every turn.
This portrayal isn’t just about safeguarding the status quo; it reflects a broader societal discomfort with the democratization of influence. The internet has torn down many gates, allowing individuals to amass followings and wield power in unprecedented ways. But this shift threatens the centralized powers that have long controlled the narrative. Negative media portrayals of financial influencers are just the latest manifestation of this unease.
