MassMutual agreed a US$4mln settlement with regulators in relation to the activities of Roaring Kitty, the ‘meme-trader’ who whilst working-from-home for the life assurance company posted over 250 hours of Youtube videos and sent 590 tweets about trading GameStop stock and options.
Roaring Kitty is the Youtube screenname of Keith Gill – his other, more notorious Reddit pseudonym is DeepF****ingValue – and he was among those at the core of the GameStop and r/wallstreetbets movement on Reddit which triggered intense trading interest in the stock.
It was simultaneously pitched in online forums as a ‘good vs evil’ battle between an army of small retail day traders and short-selling hedge funds, as well as a mid-lockdown get rich quick scheme for small-time investors to invest their US government stimulus cheques.
The so-called ‘meme-trading’ of a clutch of stocks including GameStop caught fire.
GameStop soared in value – from below US$18.00 to highs of US$483. Today it trades just above US$200 per share. The online community of retail traders became a somewhat controversial and opinion splitting phenomena. Other stocks such as AMC Entertainment, Blackberry (TSX:BB), Nokia and Palantir also found themselves on the radar for the horde of retail traders – creating spikes in volume and volatility for those stocks.
Keith Gill, with his rising notoriety and prolific content output, by February found himself testifying via webcam in front of Washington lawmakers in Congress.
Now, regulators in Massachusetts have found that MassMutual failed to have reasonable policies and procedures to monitor the personal trading of its registered agents, among other issues related to Gill.
In one example highlighted by regulators Gill sold US$750,000 of GameStop options and bought US$703,600 of GameStop stock in one January day, and, MassMutual system and procedures did not flag either trade, despite the firm’s rule to flag employee deals of over US$250,000 in any single security.
MassMutual also failed to monitor Gill’s social media accounts, and the accounts of others in the organisation who were designated as broker-dealers.
Gill worked at MassMutual from April 2019 to January 2021, whilst GameStop share price spiked higher.
MassMutual said in a statement that it was pleased to avoid the expense and distraction associated with protracted litigation, whilst it neither admitted nor denied state regulators’ findings through the settlement.