Who started the GameStop stock surge? Meet the leader

The investor who helped direct the world’s attention to GameStop stock, leading a horde of online followers in a bizarre market rally that made and lost fortunes from one day to the next, may be more than he seems.

David beats Goliath

“I didn’t expect this,” said Keith Gill, thirty-four years old, known as “DeepF—ingValue” by fans on Reddit’s WallStreetBets forum. He said he didn’t set out to draw the attention of Congress, the Federal Reserve, hedge funds, the media, trading platforms, and hundreds of thousands of investors.

“This story is so much bigger than me,” Gill told The Wall Street Journal in his first interview since the unboxing this week of a volatile new stock-market game. “I support these retail investors, their ability to make a statement.”

To many of them, Gill is the force behind the quadruple-digit gains in shares of the video game retailer GameStop, up more than 1600% this year through Friday. The stock jumped 135% to $347.51 on Wednesday, a record, before plunging to $194 a share Thursday and then sharply rebounding to end the week. At the start of the year, GameStop shares went for around $18.

Investor advocate

Many online investors say his advocacy helped turn them into a force powerful enough to cause big losses for established hedge funds and, for the moment, turn the investing world upside down.

Gill began investing in GameStop around June 2019, he said, when it was hovering around $5 a share. Earlier that year, the game retailer was hunting for its fifth chief executive in a little over 12 months. Gill kept buying stock. Although he never played much besides Super Mario or Donkey Kong, he saw potential for the struggling retailer to reinvigorate itself by attracting new customers with the latest video game consoles.

No amateur here

On January 29, CNN’s Erin Burnett told millions of viewers that it was “amateur traders” who had taken on the powerful Wall Street hedge funds to pump up the share price of GameStop. The New York Post also called Keith Gill, the man who initiated the frenzy in GameStop stock shares, an “amateur investor.”

However, according to WallStreetonParade.com, Wall Street’s self-regulator, FINRA, shows on its publicly available BrokerCheck, that Keith Patrick Gill holds a Series 7 license, a Series 3 license, and a Series 24 license. Which means he’s licensed to trade stocks, bonds, and commodities for clients, and can supervise others who do so.

Licensed for more than four years, Gill was a Registered Rep at MassMutual by day and a promoter on social media by night, sending out YouTube video promotions for GameStop that were filmed at a trading desk he had set up in his basement.

Regulatory reasons

This may end up being a serious problem for both Gill and MassMutual. A genuine amateur trader could plead ignorance of industry rules about hyping stocks to the public. A heavily licensed industry professional cannot. Wall Street’s FINRA has strict rules for licensed brokers regarding use of social media.

The broker-dealer unit of MassMutual, MML Investor Services LLC, where Gill was employed, could potentially face charges of failure to supervise. Most lawsuits brought, and won, against brokerage firms are for “failure to supervise”.

It’s also unlikely that MassMutual would have approved Gill to post on Reddit’s WallStreetBets, or to use multiple anonymous user names and promote a $5 stock to a mass public audience, because there would be no way to know if the individual investor could afford to take the risk.

Puissant permissions

Further, Gill’s FINRA record states he’s been working for MassMutual since April 5, 2019 and is still employed there. It’s been reported in the media that Gill worked at MassMutual until recently. However, MassMutual has 30 days to file a separation/termination report with FINRA for a licensed broker. No report has been found as of this writing.

Also, Gill was posting copies of his brokerage statements at E-Trade showing his GameStop position, while he was employed at MassMutual. Under FINRA regulations, a licensed broker has to first get permission from the employing broker-dealer to open a trading account at another firm.

So while many are celebrating a victory against the big guys, the story isn’t quite over yet.