A GameStop Ringleader’s Videos Draw a Regulator’s Attention

A GameStop Ringleader’s Videos Draw a Regulator’s Attention

Moonlight under the name Roaring kitty, Keith Gill became something of an online folk hero for his devotion to GameStop, the struggling video-game retailer at the center of a business frenzy that sent his share price to the Stratosphere.

But now a regulator in Massachusetts wants to know more about Mr. Gill, A registered securities broker, And his former day job as Director of Financial Welfare Education at an insurance company based in Boston.

Inspired by Mr. Gill’s cheerleading, thousands of small investors pushed the stock in GameStop to as high as $ 483 per share and made Mr. Gill spectacularly rich on paper. A photo he posted on the Reddit WallStreetBets forum last week showed that his GameStop investment was worth $ 48 million, although his actual returns could not be independently verified.

But Mr. Gill’s former employer, MassMutual, has told securities regulators in Massachusetts that it was not known that Mr. Gill had spent more than a year posting about GameTop on social media, online message boards and YouTube . The insurer also told regulators that had it known of Mr. Gill’s outdoor activities, it would have asked him to stop or possibly expel him.

MassMutual, officially known as the Massachusetts Mutual Life Insurance Company, also informed regulators that Mr. Gill gave his notice on January 21, but technically still the firm and its securities and investment advisory arm , An employee of MML Investors Services, was through January 28. – The week when GameStop shares rose the most.

Specifically, the Massachusetts regulator is investigating whether Mr. Gill or Masmuel has broken any rules.

Licensed professionals have an “obligation” to inform their employers of their outdoor activities, said William Galvin, Massachusetts Secretary of the Commonwealth.

On Friday, Mr Galvin’s office sent a letter to the general manager of MassMutual asking for information about Mr Gill’s employment status and whether the company was aware of their outdoor activities promoting Gamestop.

The letter also sought details to monitor the firm’s “process of identifying unknown business activities” and an employee’s use of social media.

A spokesman for Mr. Galvin’s office, Debra O’Malley, said most of Massmuchual’s response was confidential because the investigation is open. But she confirmed Mr Gill’s departure date and reiterated the company’s contention that she was unaware of his activities.

Ms O’Malley said that MassMutual had told securities regulators that it had previously refused Mr Gill’s request to do side work to manage the investment portfolio for a family friend after joining the company in April 2019.

Massmutual’s spokesman, Paula Tremble, said in an email statement that Mr. Gill was no longer employed by the company and that the matter was being reviewed. He declined to comment further.

Mr. Gill, 34, did not respond to messages seeking comment. He’s mostly silent except speaking Wall Street Journal. In his article published on Friday, The Journal recently described Mr. Gill as working in marketing for MassMutual.

Mr. Gill had not posted on his YouTube channel since January 22, but he still posts on the Reddit WallStreetBets forum. On Wednesday, his account posted an image that valued his Gametop holdings at more than $ 8.6 million. The image also showed approximately $ 14 million in cash.

GameStop shares have lost more than two-thirds of their value since closing at $ 347 on January 27. The stock was up nearly 3 percent on Wednesday and closed above $ 92.

Federal regulators and legalists promise further investigation into the GameStop saga.

Members of Congress have already suggested that they investigate the practices of trading platforms such as Robinhood, which curbed retail trade at the height of the frenzy. And the House Financial Services Committee scheduled a hearing for February 18 to discuss the volatility in GameStop’s shares, as well as the effect on the short-selling market, in an attempt to punish some retail investors for the recession. Is a victim.

Treasury Secretary Janet L. Yellen has also called for federal financial regulators, including the Securities and Exchange Commission and the Federal Reserve, attend a meeting Regarding the GameStop panic, the department said on Wednesday.

In recent years the financial services industry has adopted a number of rules and policies regarding the use of social media by financial professionals.

The Financial industry regulatory authority – the securities industry’s main self-regulatory organization – states that financial services professionals should avoid making “false, misleading claims, exaggerated statements and material lapses” on social media. FINRA’s guidelines require brokers and other financial services firms to “monitor business-related content” that employees post.

Mr. Gill’s roaring kitty video featured a disclaimer stating that investors should consult with a financial advisor before making any investment decision and “express any views expressed on this YouTube channel regarding a particular investment As a specific motivation. “

Andrew Calmary, an attorney for Finn Dixon & Herling and former director of the New York office of the Securities and Exchange Commission, said it is to determine soon whether Mr. Gill has violated any securities rules. But Mr. Gill could violate company rules if he did not get permission for his posts on Reddit and YouTube.

“Firms do not allow employees to go out and make predictions on stocks,” he said of employees who are not analysts. Many financial firms also need to be told if they have brokerage accounts with other firms to monitor their business activities, he said.

Mr. Gill, as a securities broker, is registered With FINRA. Their broker registration does not indicate that they have any external business activity. Finara Rules prohibit brokers By entering incomplete or misleading information about yourself.

It is not clear if MassMutual itself has any regulatory issues. Firms may be liable for failing to monitor employees, but if Mr. Gill circumvents the firm’s procedures for monitoring employees’ use of social media, it cannot be at fault.

For small investors in Gametop and other stocks in hopes of damaging under-sold hedge funds, Mr. Gill’s moonlighting activities may not be a concern.

But Mr Galvin said his office was investigating the matter to ensure the integrity of the stock advising markets and securities professionals. Retail investors need to know everything about the people with whom they invest or seek advice from them, he said.

“I’m not trying to inhibit anyone’s ability to reach the market,” Mr. Galvin said. “The issue here is transparency.”

Nathaniel Popper Contributed to reporting.



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