Finance

Massachusetts fines MassMutual $4.75 mln in 'Roaring Kitty' case

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Keith Gill, an individual online investor in GameStop, testifies during an entirely virtual hearing of the U.S. House of Representatives Committee on Financial Services entitled “Game Stopped? Who Wins and Loses When Short Sellers, Social Media, and Retail Investors Collide?”, in Washington, February 18, 2021. House Committee on Financial Services/Handout via Reuters

BOSTON, Sept 16 (Reuters) - A MassMutual investment subsidiary has agreed to pay $4.75 million to resolve allegations by Massachusetts securities regulators including that it failed to supervise its agents, among them the social media persona "Roaring Kitty," whose online posts helped spark January's trading frenzy in GameStop Corp (GME.N) shares.

Massachusetts Secretary of the Commonwealth William Galvin on Thursday said MML Investors Services failed to detect the activities of Keith Gill, who touted GameStop stock in his spare time while he was working at the company.

Galvin, the state's top securities regulator, alleged MassMutual also inadequately supervised other agents and failed to review their social media usage or catch excessive trading in their personal accounts.

The company agreed to pay a $4 million fine to resolve those allegations and another $750,000 for failing to register 478 broker-dealer agents. It also agreed to overhaul its social media policies.

MassMutual did not admit wrongdoing and said it was "pleased to put this matter behind us."

Galvin's inquiry into Gill remains pending. His lawyer did not respond to a request for comment. read more

Gill, known as "Roaring Kitty" on YouTube and "DeepF***ingValue" on Reddit, was a key figure in the so-called "Reddit rally," which saw shares of GameStop surge 400% in a week before crashing back to pre-surge levels earlier this year.

He began sharing his positions on Reddit's popular Wallstreetbets trading forum in September 2019, posting a portfolio screenshot indicating he had invested $53,000 in GameStop.

By late January, Gill, 35, was up over 4,000% on stock and options investments in the company, with his GameStop position plus cash worth nearly $48 million, according to his Reddit posts.

At the time, Gill worked at MassMutual in a marketing and financial education job and was a registered financial broker in Massachusetts.

State regulators found MassMutual failed to detect nearly 1,700 trades by Gill, who was able to execute at least two trades in GameStop in excess of $700,000, beyond a company limit.

Reporting by Nate Raymond in Boston Editing by Sonya Hepinstall and Cynthia Osterman

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