Insurance company fined for failing to monitor GameStop saga staff | Business

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Massachusetts regulators in the United States fine insurance and financial services company MassMutual $ 4 million, order it to overhaul its social media policies after accusing the company of failing to supervise an employee whose online cheerleader of GameStop shares helped start the frenzy that rocked Wall Rue earlier this year.

The settlement announced Thursday by Commonwealth Secretary William Galvin focuses on the shares of Keith Gill, who was an employee of a subsidiary of MassMutual from April 2019 to January 2021. His tenure ended when the share price GameStop suddenly jumped almost 800% in a week. , as hordes of novice and small-budget investors piled up, much to the shock and fear of professionals.

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

Massachusetts regulators cited the posts while alleging that MassMutual failed to monitor the social media accounts of Gill and other employees who were registered as brokerage agents in the state, and therefore subject to certain monitoring requirements. The MassMutual unit where Gill worked prohibits brokerage agents from discussing generic securities on social media.

In his posts online, Gill often spoke about the reasons he owned and was optimistic about GameStop’s actions, even though they had been struggling for years. He used the nicknames “Roaring Kitty” and “DeepValue,” with a curse in the middle of the latter, and he amassed tens of thousands of followers. He has also posted regular updates on Reddit regarding his GameStop holdings, which have reached tens of millions of dollars.

Gill, and the red headband he wore in several of his videos, have become such central characters in the GameStop phenomenon that he testified at a congressional hearing about it. There, he said once again, “I love stocks,” a statement that has become a rallying cry for GameStop investors in Internet forums.

Regulators also said MassMutual does not have reasonable policies and procedures to monitor the personal transactions of its registered agents, among others. To monitor excessive trades, for example, the MassMutual unit where Gill worked had a rule to report trades of US $ 250,000 or more in a single title made on all accounts by registered representatives. Regulators say Gill sold $ 750,000 in GameStop options and bought $ 703,600 of GameStop shares in one day in January, but her employer’s trade monitoring system did not report any of the transactions.

In the settlement, MassMutual neither admitted nor denied the findings of state regulators. He said in a statement he was “happy to put this case behind us, avoiding the expense and distraction associated with protracted litigation.”

– AP


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