Galvin orders MassMutual to pay $ 4 million for social media policies


MassMutual’s subsidiary MML Investors Services will pay the state of Massachusetts $ 4 million in fine, the office of Commonwealth Secretary William Galvin arguing that the company has improperly supervised the use of social media by its agents, including Keith Gill, a former registered representative whose social media posts have become a focal point of the GameStop saga. Gill is known for his Reddit nicknames “DeepF —— Value” and “Roaring Kitty” on YouTube.

The consent orders were signed this week, with Galvin claiming that MassMutual had agreed to “undergo an independent compliance review” of its social media policies and business practices for brokers / dealers, and will also be subject to an independent compliance review. a three-year compliance audit. According to Galvin, poor oversight of the company’s social media has consistently failed to identify Gill’s identity.

“It is clear that MassMutual has not been 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 Roaring Kitty’s posts, when his own employer ignored his online personality.”

According to the consent order, Gill worked as an agent for MassMutual between April 2019 and January this year, during which time he posted hundreds of times on social media. As of August 2019, Gill began posting articles on GameStop and other titles on the “WallStreetBets”Subreddit, and started posting videos and live broadcasts on investing in GameStop titles on YouTube in July 2020.

“Although he never mentioned his name or affiliation with (MML Investors Services), Gill’s face was central to his YouTube videos,” the order says. “Gill has posted at least 80 videos containing over 250 hours, or over 10 days, of content, all of which he streamed live and posted while registered with (MML).”

Gill also reportedly tweeted on the subject from July 2020, eventually tweeting on GameStop at least 590 times until he was fired from MassMutual in January 2021. Gill’s social media posts under his characters “Roaring Kitty And “DeepF **** Value” coincided with a run on GameStop stocks, causing wild swings in its price and market. The GameStop frenzy, associated with short sellers suffer drastic losses and brokerage applications the adoption of trade restrictions on certain stocks has led to a tumultuous period of market volatility, media attention and scrutiny by Congress.

According to Galvin, MassMutual did not supervise Gill and other brokerage / dealer agents in reviewing their use of social media, even as Gill created “educational content” that MassMutual agents would use when speaking. with clients and others. According to the order, at least one MML employee was aware of Gill’s posts on GameStop in September of last year, but it was not until January 18, 2021 that another employee alerted the head of In Good Company (IGC), ad / b / a and the marketing program Gill worked for in MML. (Gill wasn’t fired until Jan. 28, during which time he made 19 additional securities-related social media posts, according to the ordinance.)

In response to the controversy, Gill was sued in Massachusetts federal court for allegedly portraying himself as an “amateur investor” and for artificially increasing the price of GameStop stock, and registration with FINRA with MML was made redundant about a month after terminating his employment there. In written testimony during a congressional hearing on the GameStop saga, Gill argued that he had never sold any titles or acted as an advisor while working for MML, and had never solicited GameStop investments for his own benefit, calling the idea that he was using social media to promote the action “absurd.”

“I was perfectly clear that my channel was for educational purposes only and my aggressive investing style probably wouldn’t suit most people who watch the channel,” he said. “That other individual investors bought the stock was irrelevant to my thesis, the emphasis was on the fundamentals of the company. “

According to the investigation by Galvin’s securities division, MassMutual also failed to detect nearly 1,700 transactions that Gill made in three separate individual accounts, including transactions almost twice as high as the limit of 250. $ 000 per business transaction. Additionally, he executed at least two GameStop transactions totaling over $ 700,000 without MassMutual’s knowledge, and in a separate order, Galvin demanded that MML obtain the registration of 478 b / d agents and pay an administrative fine. of $ 750,000.

“MassMutual is happy to put this case behind us, avoiding the expense and distractions associated with protracted litigation,” a MassMutual spokesperson said of Galvin’s order.

Last week, MML Investors Services settled with the Securities and Exchange Commission for allegedly failing to disclose conflicts of interest in income sharing arising from recommendations of mutual fund share classes. An investigation into Gill’s Massachusetts recording is “still ongoing,” according to Galvin’s office.

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