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MassMutual sentenced to a fine for not monitoring the GameStop saga star

MassMutual sentenced to a fine for not monitoring the GameStop saga star

Massachusetts regulators fine MassMutual $ 4 million and order it to revise its social media policies after accusing the company of not overseeing an employee whose online cheerleading of GameStop shares helped start the Wall Street shake-up frenzy earlier this year .

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The settlement announced Thursday by Commonwealth Secretary William Galvin is about the actions of Keith Gill, who was employed by a MassMutual subsidiary from April 2019 to January 2021. His term ended when GameStop’s share price suddenly rose nearly 800% in a week, hordes of smaller pockets and novice investors stacked in, to the shock and awe of professionals.

Gill’s job at MassMutual was to create educational materials for current and potential customers, but regulators say he also posted more than 250 hours of videos on YouTube and sent at least 590 tweets about investing and GameStop via accounts not affiliated with the company.

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Massachusetts regulators cited these announcements, claiming that MassMutual failed to monitor social media accounts for Gill and other employees who were registered as broker-dealers in the state and therefore subject to certain regulatory requirements. The MassMutual unit where Gill worked prohibits brokerage agents from discussing generic securities on social media.

In his online announcements, Gill often talked about why he owned and was optimistic about GameStop shares, even though it had been struggling for years. He used the nicknames “Roaring Kitty” and “DeepValue” with an explosive in the middle of the latter, and he gathered tens of thousands of followers. He also posted regular updates on Reddit about his GameStop holdings, like balloons worth tens of thousands 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 at a congressional hearing about it. There, he confessed once again: “I like the stock,” a statement that became a rallying cry for GameStop investors in forums across the Internet. GameStop shares started the year at around $ 19 and closed Thursday at $ 206.37.

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Regulators also said MassMutual did not have reasonable policies and procedures to, among other things, monitor the personal trade of its registered agents. To keep an eye on 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 that was made across all accounts by registered representatives. Regulators say Gill sold $ 750,000 GameStop options and bought $ 703,600 $ GameStop shares in one day during January, but his employer’s trade monitoring system did not mark any of the trades.

In the settlement, MassMutual did not admit or reject the findings of state authorities. It said in a statement that it was “pleased to put this case behind us and avoid the costs and distractions associated with lengthy litigation.”

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