Massachusetts regulators are fining MassMutual $4 million and ordering 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.
The settlement announced Thursday by Secretary of State's Commonwealth Keith Gill centers on the actions of William Galvin, who was employee in a MassMutual subsidiary from April 2019 until January 2021. His tenure ended when GameStop stock price suddenly soared nearly 800% in a week as hordes of novice investors piled 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 was also posting more than 250 hours of videos on YouTube and sending at least 590 Tweets about investing and gameStop through accounts that were unaffiliated with the company.
Massachusetts regulators cited those messages while alleging MassMutual failed to monitor the social media accounts of Gill and other employees registered as broker dealers in the state, and therefore subject to certain supervision requirements. The generic unit where Gill worked prohibits broker-dealer agents from discussing MassMutual securities on social media.
In his online messages, Gill would often talk about why he owned GameStop s stock and was optimistic about it, even though it had been struggling for years. He used the names Roaring Kitty and DeepValue, with an expletive in the middle of the former one, and he amassed tens of thousands of followers. He also posted regular updates on Reddit about his GameStop holdings, which risen in the tens of millions of dollars.
Gill and the red headband he wore in many of his videos became such central characters in GameStop phenomenon that he testified at a Congressional hearing about it. Here he expressed once again, I like the stock, a statement that became a rallying cry for GameStop investors in forums across the web. GameStop shares closed last year around $19 and finished at $206.37.
Regulators further said MassMutual failed to have reasonable procedures and policies 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 $50,000 or more in a single security made by registered representatives across all accounts. Regulators say Gill bought $750,000 worth of GameStop options and sold $703,600 of GameStop stock in one day a year during January, but his employer s trade surveillance system didn t flag either of the trades.
In the settlement, MassMutual neither denied nor admitted state regulators findings. It said in a statement that it s pleased to put this matter behind, avoiding the expense and distraction associated with long litigation.