MassMutual fined for failing to monitor GameStop saga star


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An online post by social media personality “Roaring Kitty” helped fuel January’s trading frenzy in GameStop shares.

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Massachusetts Regulators are fining MassMutual $4 million and ordering the company to overhaul its social media policies after accusing it of failing to monitor an employee whose online cheerleading of GameStop’s stock this year. helped launch the frenzy that shook Wall Street in the early 1990s.

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The agreement announced Thursday by Secretary of the Commonwealth William Galvin focuses on the actions of Keith Gill, who was an employee at the MassMutual subsidiary from April 2019 to January 2021. His tenure came to an end as GameStop’s stock price suddenly soared nearly 800% in a week, as hordes of small-pocketed and novice investors piled up to the shock and amazement of the pros.

Gill’s job at MassMutual was to create educational content for current and potential customers, but regulators say he was also posting more than 250 hours of videos on YouTube about investments and GameStop through accounts unrelated to the company. Were sending at least 590 tweets.

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Massachusetts regulators cited messages alleging that MassMutual failed to monitor the social-media accounts of Gill and other employees, who were registered as broker-dealer agents in the state, and were therefore subject to certain supervision requirements. . The MassMutual unit where Gill worked prohibits broker-dealer agents from discussing generic securities on social media.

In his online messages, Gill often talked about why he owned it and was optimistic about GameStop’s stock, even though it had struggled for years. He used the nicknames “Roaring Kitty” and “DeepValue”, the latter with a slang in the middle, and he amassed thousands of followers. He also posted regular updates on Reddit about his GameStop holdings, which ballooned into millions of dollars.

Gill, and the red headband in many of his videos, became such a central character in the GameStop incident that he testified about it at a congressional hearing. There he once again said, “I love stocks,” a statement that became a rallying cry in forums on the Internet for GameStop investors. Shares of GameStop started the year at around $19 and closed Thursday at $206.37.

Regulators also said that MassMutual failed to, among other things, have proper policies and procedures to oversee the individual business of its registered agents. In order to see excessive trading, for example, the MassMutual entity where Gill worked had a rule marking up transactions of $250,000 or more in a single security made across all accounts by registered representatives. Regulators say Gill sold $750,000 worth of GameStop options and bought $703,600 of GameStop stock in one day during January, but his employer’s trade monitoring system did not flag any trades.

In the settlement, MassMutual neither accepted nor denied the findings of state regulators. It said in a statement that it “is pleased to have this case behind us, avoiding the expense and distraction associated with protracted litigation.”

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