MML Investor Services, the broker-dealer and RIA owned by insurer MassMutual, will pay $4 million and overhaul its social media practices after allegedly failing to supervise the online activities of Keith Gill, a former agent who, under the names “Roaring Kitty” and “DeepF***ingValue,” was a prominent leader of the so-called meme stock frenzy earlier this year.
According to a consent order signed with Massachusetts state securities regulators, Gill was employed by MassMutual from April 2019 until January 2021 to create educational content MassMutual brokers could share with clients. During that time, he posted more than 250 hours of YouTube videos detailing investment strategies and at least 590 securities-related tweets, according to Secretary of the Commonwealth William Galvin.
Gill was also a prominent figure of the Reddit forum “WallStreetBets,” where he encouraged investors to invest in GameStop, AMC and other stocks heavily shorted by hedge funds. In late January, the price of GameStop stock rose as much as 600%,
“I do not have clients, and I do not provide personalized investment advice for fees or commissions,” Gill said at the time. “I did not belong to any groups trying to create movements in the stock price. I have never had a financial relationship with any hedge fund.”
However, Gill executed nearly 1,700 trades in the accounts of three other individuals during his time with MassMutual were not detected or monitored, according to the consent order. Some were nearly double the firm's per-transaction limit of $250,000, Galvin claims. He also allegedly made at least two GameStop trades in excess of $700,000.
“It’s clear that MassMutual was not as diligent as it should have been in supervising its employees,” Galvin said in a statement. “It took the media less than a day to identify the person behind the Roaring Kitty posts, while his own employer took no notice of his online persona.”
Without admitting or denying the findings, MassMutual has agreed to the fine and to undergo an independent compliance review of its social media and personal trading policies for broker-dealer representatives. The firm will also be subject to a three-year compliance audit.
“MassMutual is pleased to put this matter behind us, avoiding the expense and distraction associated with protracted litigation,” Laura Crisco, MassMutual’s head of media relations, said in an email.
In a separate consent order, Galvin has also demanded MassMutual seek registration of 478 brokers and pay a $750,000 administrative fine.
An investigation into Gill’s registration status in the state of Massachusetts is still pending.
