The meme trade influencer known as "Roaring Kitty" faces the possibility of a ban from the stock trading platform E-Trade. This comes after alleged market manipulation by the trader, triggered by a social media post in which he unveiled his position in GameStop (GME), creating a massive rally in the company's shares.

Joining Catalysts to dissect the details is AnnaMaria Andriotis, the Wall Street Journal reporter who broke the story. Andriotis sheds light on the timeline of events, noting that the speculation around market manipulation began on May 12 when Roaring Kitty first posted a meme to X, formerly Twitter, reigniting the meme trade. Subsequent investigations revealed that "he had made a large purchase of GameStop options before that tweet had gone out."

However, Andriotis notes there are broader implications for E-Trade if the platform decides to ban Keith Gill. Such a move could result in the loss of a substantial portion of its customer base.

"This isn't an easy calculation that is playing out internally, and it does touch on some gray areas. And it's an area... that regulators themselves are looking at," Andriotis told Yahoo Finance.

For more expert insight and the latest market action, click here to watch this full episode of Catalysts.

This post was written by Angel Smith

Video Transcript

Now moving on to gamestop, of course, e trade considering removing name stock leader Keith Gill from their platform after growing concern about potential stock manipulation around the recent gamestop purchases that is according to reporting from the Wall Street Journal.

For more on this story, we're going to bring in the reporter who broke.

We have Anna Maria, Andre Otis, Anna Maria.

Thank you so much for being here with us.

I mean, start with just what happened here, right?

Talk to me about what trading behavior your sources within Morgan Stanley noticed that indicated to them that this could be a sign of potential behavior that would be worth banning someone over.

Um Great to be speaking with you.

So the concerns began about three weeks ago.

This was following um uh the ex post um on May 12th from the account that associated with Keith Gill where it showed him leaning in and sitting on a chair leaning in.

Um and the following day, uh people working at Morgan Stanley looked into his E trade account um and saw that he had made a large purchase of gamestop options.

Uh Before that tweet had gone out Um So uh what followed were conversations that have been ongoing um around, what followed were conversations that were, that were ongoing around.

Um Well, is what he's, is, is what's playing out here.

OK.

Specifically is what's playing out that like he, he, he bought, he bought these, he bought these options.

Um And then this tweet went out and what kind of impact that had on this stop?

Is this manipulation or not?

And should we be hosting him um on the platform?

Um What happens if we remove him from the platform?

Um And so around that there, there's basically been several layers of questions here and concerns.

Yeah, I I recognize that from your reporting here and I know that obviously you cover Morgan Stanley.

So you have a lot of sources within the firm that you were able to speak with as part of your reporting and, and ability to break this news.

Talk to me about what your sources within the firm though are saying who might be flagging, this could be a bad move when it comes to Etrade in terms of the impact it could have on other customers.

What are they saying to you?

Well, that's part of the, the, the discussion internally which is um what happens if we do remove him from the Etrade platform.

What happens if he goes public?

Um might we risk a, a bunch of his followers um who are, who have e trade accounts?

Ditching e trade.

So there's several layers to this, right?

There's concerns around is what he's doing.

Manipulation um which started a few weeks ago, those concerns following the May 12th tweet.

Um In addition, there's what are the implications for e trade customers uh for each trade with regards to the customers that it might lose.

Uh given the large um followers, a large number of followers that he has.

Um So this isn't an easy calculation that's playing out internally and it does touch on some gray areas and it's an area kind of a gray area that regulators themselves are looking at, right?

We know that the SEC is looking at this behavior as well.

I'm just curious in terms of your history covering Morgan Stanley, how abnormal would it be for them to shutter an account like this one?

So Morgan ST like all brokerage brokerages, we talk about the e trade portion of it like all brokerages um has the right to shut down accounts for a variety of reasons that's stated in their policies in a, in a pretty clear way.

Um In addition, um what I learned as I was um uh learning about all of these developments is that it's um pretty normal for them to review um accounts um on a somewhat routine basis, especially if you know, they have some questions around what's going on and that's part of what played into um e trade employees looking into Keith Gill's account, um, after, um, uh, May 12th, May 13th.

Um, uh, to see, well, you know, there was a sudden surge in demand for game stock, um, uh, um, ga games stop stock.

What happened here?

Um, so the brokerages in general have a pretty, um, wide ranging latitude in terms of what they can do with regards to keep or not keep clients accounts.