Ex-Employer of ‘Roaring Kitty,’ the GameStop Trader, Fined for Lack of Oversight

The insurer MassMutual will pay a $4 million fine as part of a settlement with Massachusetts regulators involving the conduct of Keith Gill, a former employee and online trader known as “Roaring Kitty” whose relentless cheerleading for shares of GameStop was at the heart of the meme-stock mania earlier this year.

State officials who oversee markets said the unit of MassMutual that employed Mr. Gill, who resigned in January, failed to adequately supervise his and other agents’ trading and online activity. Moreover, Mr. Gill was carrying out trades on behalf of three other people not affiliated with MassMutual without the insurer’s approval, the settlement said. The insurer neither admitted nor denied the accusations, but it agreed to the fine as well as an independent compliance review and other measures.

“MassMutual is pleased to put this matter behind us, avoiding the expense and distraction associated with protracted litigation,” a spokeswoman said.

An attorney for Mr. Gill did not immediately respond to a request for comment.

Mr. Gill cultivated an online following with over 250 hours of YouTube videos, many of which detailed his views on GameStop, a troubled video game retailer that was once a mainstay of malls but whose stock had languished in recent years. Partly because of Mr. Gill’s focus on the stock, GameStop became a favorite of masses of day traders who loosely organized themselves on Reddit’s WallStreetBets trading message board — where Mr. Gill was also active — and briefly drove the company’s share price up as much as 600 percent within days in late January. GameStop’s stock is currently trading at more than $200, and remains up more than 1,000 percent since the start of the year.

GameStop and other stocks that were favorites of the online crowd, such as struggling movie chain A.M.C., were transformed into “meme stocks,” companies whose share prices gyrated wildly as online traders coordinated their buying power to drive the direction of stocks. This new generation of traders often ignored traditional sources of stock market advice and instead looked online at TikTok or YouTube for tips on playing the market. The explosion of meme stocks in late January marked the culmination of a surge of interest in stock trading that began amid the pandemic.

Mr. Gill proved to be among the more persuasive online stock market mavens. His videos — he filmed himself sitting in a video-gaming chair wearing his trademark red headband — were informal and irreverent. But even as his online profile grew, it was virtually unknown that he was a registered securities broker, and that until he resigned in January, he worked as a financial wellness education director at MassMutual, officially known as Massachusetts Mutual Life Insurance Company.

“As far as MassMutual is concerned they were obviously totally at fault for not supervising him,” William F. Galvin, the secretary of the commonwealth, said in an interview. “I mean, it was beyond a small matter of negligence. It was complete and thorough.”

Under his online alias, Mr. Gill would provide regular updates on how his GameStop investment was faring, posting his trades on Reddit under the recurring rubric of “GME YOLO Update.” At one point, during the pinnacle of the GameStop frenzy, Mr. Gill posted images on Reddit that showed his original $53,000 bet on GameStop had ballooned in value to $48 million, a trading coup that turned him into an online folk hero to legions of would-be traders.

The settlement also included other details of Mr. Gill’s trading activities that regulators said were in violation of Massachusetts rules. For example, Mr. Gill carried out nearly 1,700 trades in the accounts of three other people. What was being traded and the identities of the people were not disclosed. But such trading by a broker outside the brokerage firm for which the broker works must be approved in writing ahead of time, under Massachusetts regulations, the settlement said.

Mr. Gill had informed the company of his access to the accounts of one of those individuals, and requested permission to manage them, which the company denied, Mr. Galvin’s office said. Mr. Gill was also managing outside investment accounts for two other people, a fact MassMutual failed to identify, the settlement said.

An inquiry into Mr. Gill being conducted by Mr. Galvin’s office is still pending.

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