Keith Gill, who went by the name Roaring Kitty in the moonlight, became an online folk hero for his involvement with GameStop, the struggling video game retailer that was at the center of a trading frenzy that sent its stock price into the stratosphere.
Now a Massachusetts regulatory agency wants to learn more about Mr. Gill, a registered stockbroker, and his previous job as director of financial wellness education with a Boston insurance company.
Inspired in part by Mr. Gill’s cheerleading, thousands of small investors drove GameStop’s stock up to $ 483 per share, making Mr. Gill fabulously rich on paper. A picture he posted on the Reddit WallStreetBets forum last week showed that his GameStop investment was worth $ 48 million, although its actual returns could not be independently verified.
Mr. Gill’s former employer, MassMutual, has told Massachusetts securities regulators that he didn’t know that Mr. Gill had spent more than a year posting about GameStop on social media, online message boards, and YouTube. The insurer informed regulators that if it had known of Mr Gill’s activities outside of the company, it would have asked to stop or possibly fire him.
MassMutual, formally known as the Massachusetts Mutual Life Insurance Company, also notified regulators that Mr. Gill resigned on January 21, but technically continues to work for the company and its securities and investment advisory division, MML Investors Services, through January 28 Was – The week that GameStop stocks rose the most.
Specifically, the Massachusetts Regulatory Authority is investigating whether Mr. Gill or MassMutual has broken the rules.
Licensed professionals are “required” to inform their employers of their outside activities, said William Galvin, secretary of the Commonwealth of Massachusetts.
On Friday, Mr. Galvin’s office sent a letter to the General Counsel of MassMutual informing him about Mr. Gill’s employment status and whether the company was aware of its outside activities promoting GameStop.
The letter also asked for details on the company’s “process of identifying undisclosed business activity” and monitoring an employee’s use of social media.
Debra O’Malley, a spokeswoman for Mr. Galvin’s office, said much of MassMutual’s response was confidential as the investigation was open. However, it confirmed the date of Mr. Gill’s departure and reiterated the company’s claim that it was unaware of its activities.
Ms. O’Malley said MassMutual had notified securities regulators that it had previously denied a request from Mr. Gill to do ancillary work managing an investment portfolio for a family friend after joining the company in April 2019.
Paula Tremblay, a spokeswoman for MassMutual, said in a statement emailed that Mr. Gill was no longer employed with the company and that the matter was being investigated. She declined to comment further.
Gill, 34, did not respond to comments. He was mostly silent other than speaking to the Wall Street Journal. In his article published on Friday, The Journal described Mr. Gill as recently working in marketing for MassMutual.
Mr Gill hadn’t posted on his YouTube channel since Jan 22nd, but he still posts on the Reddit WallStreetBets forum. On Wednesday, his account posted a picture that put the value of his GameStop holdings at over $ 8.6 million. The picture also showed nearly $ 14 million in cash.
GameStop stock has lost more than two-thirds of its value since closing at $ 347 on Jan. 27. The stock rose nearly 3 percent on Wednesday to close above $ 92.
The GameStop saga has federal regulators and lawmakers promising further scrutiny.
Members of Congress have already suggested exploring practices by trading platforms like Robinhood that put the brakes on retail at the height of the noise. And the House Financial Services Committee scheduled a hearing on Feb. 18 to discuss the volatility of GameStop stock, as well as the impact on the market of short selling, the bearish stock bets that some retail investors have tried to penalize. On Wednesday, Representative Maxine Waters, the California Democrat who chaired the committee on the Cheddar financial network, said she wanted Mr. Gill to appear at the hearing.
Treasury Secretary Janet L. Yellen has also asked federal financial regulators, including the Securities and Exchange Commission and the Federal Reserve, to attend a meeting on the GameStop unrest, the department said Wednesday.
The financial services industry has had a number of regulations and guidelines in recent years regarding the use of social media by financial professionals.
The financial industry regulator – the most important self-regulatory body in the securities industry – says financial service providers must avoid making “false, misleading claims, exaggerated statements and material omissions” on social media. FINRA’s guidelines require brokers and other financial services companies to “monitor the business-related content” that employees post.
Mr. Gill’s Roaring Kitty videos contained a disclaimer that investors should consult a financial advisor before making an investment decision and “treat any opinion expressed on this YouTube channel as a specific incentive to invest”.
Andrew Calamari, attorney at Finn Dixon & Herling and former director of the New York office of the Securities and Exchange Commission, said it was too early to determine if Mr Gill had violated securities laws. But Mr Gill could have broken company rules if he hadn’t received permission to post on Reddit and YouTube.
“Corporations don’t allow employees to forecast stocks,” he said of employees who are not analysts. Many financial firms also require employees to disclose whether they have brokerage accounts with other companies in order to monitor their trading activities, he added.
Mr. Gill is registered as a securities broker with FINRA. His broker registration does not indicate that he has any outside business. FINRA rules prohibit brokers from submitting incomplete or misleading information about themselves.
It is unclear whether MassMutual itself has regulatory issues. Companies can be held responsible for not supervising their employees. However, if Mr. Gill bypasses the company’s processes for monitoring employee use of social media, it may not be at fault.
For many of the retail investors who have amassed themselves in GameStop and other stocks in hopes of hurting hedge funds short sales, Mr. Gill’s moonshine activities may not be a problem.
But Mr Galvin said his office is looking into the matter to ensure the integrity of the markets and securities professionals who provide stock advice. Retail investors need to know or seek advice about the people they invest with, he said.
“I’m not trying to interfere with anyone’s ability to get into the market,” said Galvin. “This is about transparency.”
Nathaniel Popper contributed to the coverage.
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