E*Trader Mulls Banning Key Meme Trader After Revealing $181 Million GME Position

GameStop stock soared Monday after Keith Gill, a key investor during the 2021 meme stock rally, revealed a major position in the video game retailer. AMC Entertainment (AMC) and other meme stocks jumped to follow GameStop (GME) higher. But Roaring Kitty's resurgence is drawing scrutiny from brokers and regulators.But with great rewards comes even greater risk.Gill, who goes by the username Roaring Kitty on social media platforms X and YouTube, on Sunday night posted on Reddit (RDDT) for the first time since early 2021. Gill appeared to post a screenshot of an E*Trade account showing a $181.4 million position in GameStop stock and options. However, it is unclear if it is Gill himself posting to the account. The latest Reddit post was made to r/Superstonk rather than r/wallstreetbets, where he posted his GME stock updates during the 2021 meme rally.

The June 2 screenshot indicates that Gill holds 5 million shares of GameStop stock worth $115.7 million, with an average purchase price of $21.274 per share. It also shows 120,000 call options that expire on June 21 with the right to purchase GME stock at $20 per share. The GameStop options are worth $65.7 million according to the screenshot.

But Morgan Stanley (MS)-owned E*Trade is considering kicking Gill off its platform due to concerns of potential stock manipulation, the Wall Street Journal reported late Monday citing unnamed sources. Morgan Stanley's global financial crimes unit and external counsel reportedly began discussions about if Gill's recent actions were legal and if the firm should cancel his E*Trade account, according to reports. But some Morgan Stanley employees are concerned that backlash could result in losing E*Trade clients.

Meanwhile, the Securities and Exchange Commission has been reviewing trading activity for GameStop call options around the timing of Gill's social media posts to determine if they could be considered manipulation, the WSJ reported.

Gill made a similar reappearance on X on May 12, when he posted a series of memes implying that he's back and trading again. However, most traders who bought into the mid-May rally were underwater by May 17.