Insurance company MassMutual will pay a $ 4 million fine as part of a settlement with Massachusetts regulators involving the behavior of Keith Gill, a former employee and online retailer known as “Roaring Kitty”, whose relentless cheerleading for shares in GameStop was at the heart of the meme. -stock mania earlier in the year.
State officials overseeing the markets said the MassMutual unit that employed Mr Gill, who resigned in January, failed to adequately oversee his and other agents’ trading and online activity. In addition, Gill executed trades on behalf of three other individuals who were not affiliated with MassMutual without the insurance company’s approval, the settlement said. The insurance company neither admitted nor denied the allegations, but it accepted the fine as well as an independent compliance review and other measures.
“MassMutual is happy to put this case behind us and avoid the expense and distraction associated with lengthy lawsuits,” a spokeswoman said.
A lawyer for Mr Gill did not immediately respond to a request for comment.
Mr. Gill cultivated an online entourage of over 250 hours of YouTube videos, many of which detailed his views on GameStop, a troubled video game retailer that was once a staple in malls but whose inventory had fallen in recent years. Partly because of Mr. Gill’s focus on the stock, GameStop became a favorite among lots of day traders who loosely organized themselves on Reddit’s WallStreetBets bulletin board – where Mr. Gill was also active – and briefly drove the company’s stock price up as much as 600 percent within few days at the end of January. GameStop’s stock is currently trading at more than $ 200 and remains at more than 1,000 percent since the beginning of the year.
GameStop and other stocks that were favorites among the online crowd, such as the struggling movie chain AMC, were transformed into “meme stocks”, companies whose stock prices skyrocketed as online traders coordinated their purchasing power to drive the stock market. This new generation of traders often ignored traditional sources of stock market advice and instead looked online at TikTok or YouTube for tips on how to play the market. The explosion of meme stocks in late January marked the culmination of an increase in stock trading interest that began in the midst of the pandemic.
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Mr. Gill proved to be among the more compelling online stock market makers. His videos — he filmed himself sitting in a video game chair wearing his trademark with a red headband — were informal and irreverent. But even though his online profile grew, it was virtually unknown that he was a registered securities broker and that until he resigned in January, he worked as the educational director of financial wellness at MassMutual, officially known as the Massachusetts Mutual Life Insurance Company.
“As far as MassMutual is concerned, of course, they were completely guilty of not supervising him,” William F. Galvin, secretary of the Commonwealth, said in an interview. “I mean, it was just a matter of negligence. It was complete and thorough. ”
Under his online alias, Mr. Gill regularly provides updates on how his GameStop investment was doing, posting his trades on Reddit under the recurring “GME YOLO Update” heading. At one point, during the peak of the GameStop frenzy, Mr.Gill posted pictures on Reddit showing that his initial $ 53,000 bet on the GameStop had the balloon worth $ 48 million, a bargaining chip that made him a folk music hero online for legions of wild traders.
The settlement also contained other details about Mr. Gills trading activities, which regulators said were in violation of Massachusetts rules. Eg. Completed Mr. Gill nearly 1,700 trades in the accounts of three other people. What was traded and the identity of the persons was not disclosed. But such trading from a broker outside the brokerage firm for which the broker works must be approved in writing in advance under Massachusetts rules, the settlement said.
Gill had informed the company of his access to one of those individuals’ accounts and requested permission to manage them, which the company refused, Galvin’s office said. Mr. Gill also managed external investment accounts for two other people, which MassMutual could not identify, the settlement said.
An inquiry into Mr Gill’s by Mr Galvin’s office is still pending.