GALVIN ORDERS OVERHAUL OF MASSMUTUAL’S SOCIAL MEDIA POLICIES IN WAKE OF “ROARING KITTY” POSTS
Secretary of the Commonwealth William F. Galvin today ordered MML Investors Services, LLC, a subsidiary of MassMutual, to overhaul their social media policies and pay a $4 million fine over the company’s failure to supervise agents, including Keith Gill, who is also known on some social media sites as “Roaring Kitty.”
Under consent orders signed this week, MassMutual has agreed to undergo an independent compliance review of its social media policies and trading by its broker-dealer agents. The company will also be subject to a 3-year compliance audit.
According to the consent order, Gill was employed by MassMutual from April 2019 until January 2021, a period in which he frequently posted videos and other materials online regarding investments and trading. The period of Gill’s employment overlapped with his involvement in the GameStop and meme stock frenzy that occurred in late 2020 and early 2021.
The consent order details inadequate supervision of broker-dealer agents, including Gill, by MassMutual, which failed to review social media usage or catch excessive trading in the personal accounts of agents.
While employed by MassMutual, Gill was responsible for creating educational content for use by MassMutual broker-dealer agents to present to individuals. At the same time that Gill was preparing investor education materials, he posted more than 250 hours of videos on YouTube detailing investment strategies, which went unnoticed by his employer, as did at least 590 securities-related tweets posted by Gill.
“It’s clear that MassMutual was not as diligent as it should have been in supervising its employees,” Galvin said. “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.”
The inquiry opened by Galvin’s Securities Division in January showed that MassMutual failed to detect or monitor nearly 1,700 trades effected by Gill in the accounts of three other individuals, as well as transactions effected by Gill that were nearly double MassMutual’s per-transaction limit of $250,000. Also without notice of his employer, Gill was able to execute at least two trades in GameStop in excess of $700,000.
In addition to the $4 million administrative fine and the independent compliance review, MassMutual has also agreed to train its broker-dealer agents concerning social media and personal trading. An inquiry into Keith Gill’s registration in Massachusetts is still pending.
In a separate consent order also entered against MMLIS, Galvin has also ordered that company to seek registration of 478 broker-dealer agents and pay a $750,000 administrative fine.