NEW YORK — Massachusetts regulators fine MassMutual $4 million and recommend it revise its social media policies after accusing the company of failing to monitor an employee whose online cheerleading of the GameStop- stocks helped launch the frenzy that shook Wall Street earlier this year.
The settlement announced Thursday by Commonwealth secretary William Galvin centers on the actions of Keith Gill, who was an employee of a subsidiary of MassMutual from April 2019 to January 2021. His tenure ended when GameStop’s stock price suddenly surged nearly 800% in a week as hordes of smaller and novice investors piled up, much to the horror and awe of professionals.
Gill’s job at MassMutual was to create educational materials for current and potential clients, but regulators say he also posted more than 250 hours of videos on YouTube and sent at least 590 tweets about investing and GameStop through accounts not affiliated with the company.
Massachusetts regulators cited those posts as claiming that MassMutual did not monitor the social media accounts of Gill and other employees registered as broker-dealer agents in the state and were therefore subject to certain oversight requirements. The MassMutual unit where Gill worked bans broker-dealer agents from discussing generic securities on social media.
In his online posts, Gill often shared why he owned and was optimistic about GameStop’s stock, even though he had struggled for years. He used the nicknames “Roaring Kitty” and “DeepValue”, with an expletive in the middle of the latter, and he amassed tens of thousands of followers. He also posted regular updates on Reddit about his GameStop stock, which ran into the tens of millions of dollars.
Gill, and the red headband he wore in many of his videos, became such central characters in the GameStop phenomenon that he testified about it in a congressional hearing. There he again claimed “I like the stock,” a statement that became a rallying cry for GameStop investors on forums on the Internet. GameStop shares GME,
started the year at about $19 and closed at $206.37 on Thursday.
Regulators also said MassMutual did not have reasonable policies and procedures to monitor, among other things, the personal trading of its registered agents. To watch out for excessive trading, for example, the MassMutual unit where Gill worked had a rule to mark transactions of $250,000 or more in a single security made by registered representatives on all accounts. Regulators say Gill sold $750,000 worth of GameStop options in January and bought $703,600 worth of GameStop stock in one day, but his employer’s trade monitoring system didn’t flag either trade.
In the settlement, MassMutual acknowledged or denied the findings of the state regulators. It said in a statement it is “glad to put this case behind us and avoid the costs and distractions associated with lengthy lawsuits.”