MassMutual has been fined $4 million as part of a settlement with Massachusetts regulators, who accused the life insurance company of failing to adequately supervise an employee who promoted GameStop’s stock on social media, helping prompt a trading frenzy earlier this year.
William Galvin, the state’s secretary of the commonwealth, unveiled the terms of the settlement Thursday, under which MassMutual neither admitted nor denied regulators’ findings, according to The Associated Press.
The fine centers around arguments that MassMutual failed to supervise Keith Gill, who worked at a MassMutual subsidiary from April 2019 to January 2021, during which time regulators said that he posted more than 250 hours of videos on YouTube and at least 590 tweets about investing in GameStop while using accounts unaffiliated with MassMutual.
Gill, who according to the AP was responsible for creating educational materials for existing and potential customers, was prohibited under guidelines from his MassMutual unit from discussing generic securities on social media, regulators said.
The employee used various nicknames online, including “Roaring Kitty” and “DeepF---ingValue,” and posted regularly on Reddit about GameStop.
By the end of Gill’s tenure at MassMutual, GameStop’s stock price surged by nearly 800 percent in a week as amateur investors took to the video game company and other typically shorted stocks that were popularized on Reddit.
According to the AP, Massachusetts regulators said Gill and other employees registered as broker-dealer agents in the state are subject to particular supervision requirements, which MassMutual allegedly failed to meet.
For example the regulators noted that the MassMutual unit where Gill worked was supposed to flag transactions of $250,000 or more in a single security across registered representatives accounts.
However, the team allegedly did not flag the $750,000 worth of GameStop options Gill sold and $703,600 in GameStop stock he bought within a single day in January.
The Hill has reached out to Galvin’s office for additional information.
In a statement shared with The Hill, MassMutual said it was “pleased to put this matter behind us, avoiding the expense and distraction associated with protracted litigation.”
The rapid trading of GameStop earlier this year caused a frenzy on Wall Street, and also prompted scrutiny of Robinhood, a trading platform popular among amateur investors who helped drive up stocks for GameStop and other companies like AMC.
While some have praised the trading platform as a way to open up the stock market to new investors, critics have said it can fuel overly speculative trading and drive rapid fluctuations in stock prices.