By Pam Martens and Russ Martens: February 12, 2021 ~
We knew Keith Gill’s worst nightmare was about to happen when we learned that he lived in Massachusetts. That state is uniquely the worst place to flout securities regulations because the Secretary of the Commonwealth, who oversees its Securities Division, is William Galvin, who has been reelected to that post every four years since first obtaining the position in 1994. Galvin is nationally known as a Pitbull for going after security frauds taking place in his state.
Keith Gill is the man who hawked the shares of GameStop on Reddit’s WallStreetBets’ message board under the screen name DeepF***ingValue and on YouTube under the handle Roaring Kitty. As we reported on January 30, far from being an “amateur trader,” as Gill was being characterized by the media, he actually held sophisticated trading licenses and was registered with the broker-dealer unit of MassMutual. As we pointed out in the article, when you are a licensed broker and an associated person of a broker-dealer, you have to follow strict licensing rules. Gill appears to have flouted a number of those rules and Galvin has now subpoenaed him to testify, according to the Boston Globe.
Another poster on the WallStreetBets message board that is likely seeing some sweat beads form on his brow is the infamous Martin Shkreli, who is serving a 7-year sentence for securities fraud in Federal prison in Allenwood, Pennsylvania. Shkreli, a hedge fund manager turned “Pharma Bro,” gained notoriety hiking the price of the drug, Daraprim, by 5400 percent. The drug was used to treat life-threatening parasitic infections as well as to treat AIDS and cancer patients with compromised immune systems. Shkreli’s prison sentence was related to his fraud at his hedge funds, not his spiking the price of Daraprim.
Prior to his conviction, Shkreli had been a moderator at Reddit’s WallStreetBets, according to an interview the forum’s founder, Jaime Rogozinski, gave to the news service, Cheddar. In that interview, Rogozinski calls Shkreli “a brilliant financier.”
Rogozinski was removed last year from the WallStreetBets forum over alleged conflicts of interest. Prior to that, he posted under user name jartek. In a post 11 months ago, Rogozinski said he could “confirm” that the posts then being made under the user name “martinshkreli” were “real.” According to the subreddit under the name of user martinshkreli, two people, Mo and Reida, have been making posts on his behalf. In a post under user name martinshkreli on January 29 of this year, it says “I still think GME [stock symbol for GameStop] will trade at 1,000.” The long post notes at the end that it was “sent from martin, posted by mo.”
As a result of Shkreli’s jury convictions, the Securities and Exchange Commission barred him from “acting as a broker or investment adviser or otherwise associating with firms that sell securities or provide investment advice to the public.”
We emailed Shkreli to confirm if he was, indeed, the author of the posts under user name martinshkreli. We heard nothing back. We emailed Reddit. We heard nothing back.
We emailed the communications team at the parent corporation that owns Reddit, Advance Publications, regarding the posts on a forum that includes young, impressionable, novice investors by a man claiming to be sitting in a prison cell after a conviction of securities fraud. We also asked if the “gratuitously obscene language” on WallStreetBets and the investigations now encircling the platform would do harm to their other iconic and respected brands. Advance Publications’ Condé Nast division is home to iconic magazine brands including Vogue, The New Yorker, GQ, Vanity Fair, Wired, Architectural Digest and others.
We received no response. That email was sent three days ago.
Yesterday, the Wall Street Journal reported that the U.S. Department of Justice has opened a criminal investigation into the trading of GameStop.