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Massachusetts fines MassMutual US$ 4.75 million in 'Roaring Kitty' case

BOSTON :A MassMutual investment subsidiary has agreed to pay US$4.75 million to resolve allegations by Massachusetts securities regulators including that it failed to supervise its agents, among them the social media persona "Roaring Kitty," whose online posts helped spark January's trading frenzy in GameStop Corp shares.

Massachusetts Secretary of the Commonwealth William Galvin on Thursday said MML Investors Services failed to detect the activities of Keith Gill, who touted GameStop stock in his spare time while he was working at the company.

Galvin, the state's top securities regulator, alleged MassMutual also inadequately supervised other agents and failed to review their social media usage or catch excessive trading in their personal accounts.

The company agreed to pay a US$4 million fine to resolve those allegations and another US$750,000 for failing to register 478 broker-dealer agents. It also agreed to overhaul its social media policies.

MassMutual did not admit wrongdoing and said it was "pleased to put this matter behind us."

Galvin's inquiry into Gill remains pending. His lawyer did not respond to a request for comment.

Gill, known as "Roaring Kitty" on YouTube and "DeepF***ingValue" on Reddit, was a key figure in the so-called "Reddit rally," which saw shares of GameStop surge 400per cent in a week before crashing back to pre-surge levels earlier this year.

He began sharing his positions on Reddit's popular Wallstreetbets trading forum in September 2019, posting a portfolio screenshot indicating he had invested US$53,000 in GameStop.

By late January, Gill, 35, was up over 4,000per cent on stock and options investments in the company, with his GameStop position plus cash worth nearly US$48 million, according to his Reddit posts.

At the time, Gill worked at MassMutual in a marketing and financial education job and was a registered financial broker in Massachusetts.

State regulators found MassMutual failed to detect nearly 1,700 trades by Gill, who was able to execute at least two trades in GameStop in excess of US$700,000, beyond a company limit.

(Reporting by Nate Raymond in BostonEditing by Sonya Hepinstall and Cynthia Osterman)

Source: Reuters

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