MassMutual To Pay $4.75M Fine Over Role Of 'Roaring Kitty,' Others In GameStop Short Squeeze

A subsidiary of Massachusetts Mutual Life Insurance Co. has agreed to pay a fine of $4.75 million to settle allegations by Massachusetts securities regulators that it failed to supervise its employees, including Keith Gill, who inspired the GameStop Corp. GME short squeeze earlier this year.

What Happened: Massachusetts Secretary of the Commonwealth William Galvin said that MML Investors Services, a subsidiary of MassMutual, failed to detect and monitor the social media activities of its broker-dealer agent Gill, better known as "DeepF---ingValue” on Reddit and as “Roaring Kitty” on YouTube.

Gill’s online posts regarding his bets on GameStop stock helped launch the retail trading frenzy earlier this year and led to amateur investors piling into the videogame retailer’s stock. He was an employee at MML from April 2019 until January 2021.

According to Galvin, MML failed to detect at least two trades made by Gill in GameStop in January, each nearly $500,000 in excess of the company’s per-transaction limit of $250,000.

MML has agreed to pay a fine of $4 million to settle the allegations and also pay $750,000 for its failure to register 478 broker-dealer agents during an approximately five-year period. In addition, the company agreed to undergo an independent compliance review of its social media policies for its brokers.

See Also: SEC To Publish Its Report On GameStop Short Squeeze Soon, Says Chair Gary Gensler

Why It Matters: Gill posted messages and videos about his large investments in GameStop stock on Reddit’s WallStreetBets trading forum as well as his YouTube channel but never disclosed his name or his affiliation with MML.

Gill’s online posts helped spark the Reddit rally and catapulted GameStop’s stock to a record high in late January. Gill continued to hold 50,000 shares of GameStop and 500 call options in February.

GameStop’s stock continues to see high interest from retail investors. The stock’s year-to-date gains stand at almost 995.4%.

Price Action: GameStop shares closed 0.9% higher in Thursday’s regular trading session at $206.37, but declined 0.5% in the after-hours session to $205.30.

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Photo: Courtesy of JJBers via Flickr