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U.S. insurer MassMutual has been fined $ 4 million by the securities regulator in its home state of Massachusetts for failing to properly supervise Keith Gill, a former employee whose videos under pseudonyms such as “Roaring Kitty” have encouraged millions of new day traders to pump up GameStop stock. upper.
Gill, his forehead often adorned with a red bandana, has become a central figure in the meme stock craze that captivated the country and landed it before a congressional committee hearing last February.
The Massachusetts securities regulator said that when Gill was employed at a brokerage subsidiary of MassMutual, the company did not oversee the use of social media by its agents or other agents or reviewed the “Excessive trading” in their personal accounts.
Gill, who also took the pseudonym DeepFuckingValue, was working at MassMutual to create educational materials for clients. The regulator noted that he recorded and shared over 250 hours of videos of his trading strategies on YouTube while working at MassMutual between April 2019 and last January.
“It is clear that MassMutual has not been as diligent as it should have been in supervising its employees,” said William Galvin, secretary of the Commonwealth of Massachusetts. “It took the media less than a day to identify the person behind Roaring Kitty’s posts, when his own employer ignored his online personality.”
MassMutual has agreed to undergo an independent review of its social media guidelines and will be audited for three years, Galvin said.
“MassMutual is happy to put this case behind us, avoiding the expense and distractions associated with protracted litigation,” the company said.
Gill has become a central figure in the meme stocks craze, posting his trading activity at struggling video game retailer GameStop on the social media platform Reddit.
His trade was closely watched and even emulated by others who marveled at watching the company’s stock drop from around $ 19 at the start of the year to $ 483 a few weeks later.
Volatile activity has taken its toll on hedge funds and strained the finances of Robinhood, the online trading platform favored by many day traders, prompting it to hastily raise billions of dollars in capital.
Galvin’s office also found that Gill executed nearly 1,700 transactions for three other anonymous people, some of which were worth nearly double the $ 250,000 limit MassMutual set for its employees. The regulator said the company had not detected the transactions.
MassMutual, who neither admitted nor denied the findings, was also ordered to pay an additional fine of $ 750,000 for failing to register other agents and seeking registration of 478 of them.