The life insurance company MassMutual has been fined $4 million by the state of Massachusetts for failing to censor an employee who helped launch the GameStop squeeze saga that rocked Wall Street and bankrupted hedge funds earlier this year.
According to the Associated Press, Massachusetts regulators not only slapped the company with the hefty fine but also ordered it to “overhaul its social-media policies after accusing the company of failing to supervise an employee whose online cheerleading of GameStop’s stock helped launch the frenzy that shook Wall Street earlier this year.”
In early 2021, under the nicknames “Roaring Kitty” and “DeepF***ingValue,” MassMutual employee Keith Gill posted more than 250 hours of video on YouTube and sent over 590 tweets “about investing and GameStop through accounts that were unaffiliated with the company.”
Wondering what the GameStop uproar is all about? Here’s your quick guide to catch up https://t.co/mCRXKOrhaO
— Breitbart News (@BreitbartNews) January 30, 2021
Along with the Reddit group WallStreetBets, Gill’s promotion of GameStop caused the stock to soar upwards of 800 percent in just five days, forcing a giant squeeze on fat-cat investors who had shorted the stock.
According to Massachusetts regulators, Gill’s former employer, MassMutual, “failed to monitor the social-media accounts of Gill and other employees who were registered as broker-dealer agents in the state, and therefore subject to certain supervision requirements.”
Regulators also said MassMutual failed to have reasonable policies and procedures to monitor the personal trading of its registered agents, among other things. To watch for excessive trading, for example, the MassMutual unit where Gill worked had a rule to flag transactions of $250,000 or more in a single security made across all the 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 surveillance system didn’t flag either of the trades.
In a statement to The Hill, MassMutual said that the company is “pleased to put this matter behind us, avoiding the expense and distraction associated with protracted litigation.”