You might think that the hordes of Redditors and Robinhoods would be done with Gabe Plotkin. They had cost him hundreds of millions of dollars and his investors billions of dollars. They forced him into a humiliating retreat on his GameStop short. They left him no recourse but to go cap-in-hand to Ken Griffin and his old boss—who he’d also lost a pretty penny—to keep his Melvin Capital Management afloat.
But no, because in addition to turning their fury on their formerly preferred trading platform, they’re also alleging that losing more than half your money on a single highly-levered short was all part of Plotkin’s master plan to screw over the little guys who thought they were screwing him.
Gabriel Plotkin’s Melvin Capital, the hedge fund at the center of the GameStop trading frenzy in January, is a defendant in nine lawsuits by retail investors alleging a conspiracy to limit trading that caused them to lose money…. The lawsuits have been filed on behalf of investors in New York, California, Virginia, Illinois, and Texas.
One purported class action lawsuit, filed Feb. 8 in the Eastern District of New York, said its claims “arise from a conspiracy to deprive individual investors… of their ability to invest in the open market in the midst of an unprecedent[ed] stock rise so that defendants could shield themselves from incurring substantial losses as a result of their own high-risk short selling strategies.”
According to the suit, buying restrictions were only placed on retail investors, not institutional investors like the hedge funds named in the complaint that were “leveraged short” and had a vested interest in seeing the prices decline so they could cover their shorts at lower prices…. The lawsuit filed in the Eastern District of New York claims that hedge fund defendants “made misstatements about their role in the conspiracy to the public.”
Anyway, not that it matters to the above cases, which Melvin, of course, says are “without merit,” nor, frankly, to GameStop’s untethered-from-reality stock price, but the company at the center of the legal battle is continuing its transformation into an asset that may one day be worthy of a slightly larger fraction of that stock price.
GameStop Corp said on Tuesday its chief customer officer Frank Hamlin will resign from the company on March 31, the latest sign of a broader overhaul at the video game retailer driven by its top shareholder, Chewy.com co-founder Ryan Cohen…. GameStop last month also said Chief Financial Officer Jim Bell would step down…. Cohen hopes to transform the brick-and-mortar retailer into an e-commerce firm that can take on big-box retailers such as Target Corp and Walmart Inc and technology firms such as Microsoft Corp and Sony Corp.
Melvin Capital Is Facing Nine Lawsuits Related to the GameStop Frenzy [II]
GameStop loses second senior exec as shakeup deepens [Reuters]