Hawke Discusses “Roaring Kitty’s” use of Regulatory Arbitrage in Return to Social Media

Securities Enforcement Litigation partner Daniel Hawke was recently quoted in The Wall Street Journal article, “Keith Gill’s GameStop Trades Pose Conundrum for Market Cops.” The article highlights the recent social media return of online influencer, financial analyst, and investor Keith Gill, whose public analyses of GameStop stock have been credited with being responsible for the surge in the videogame retailer’s stock price in January 2021.

GameStop (GME) shares more than doubled upon Gill’s return to social media, sparking questions about whether the U.S. Securities and Exchange Commission (SEC) could bring a case against him. Hawke, former head of the SEC’s market-abuse unit, discussed the concept of regulatory arbitrage and told The Wall Street Journal that “what he’s doing is exploiting a gap in the rules. He is using his celebrity and influence to draw people to buy the stock. The rules that exist do not permit the SEC to prosecute that conduct unless there is an element of deception.”

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