MassMutual Fined in GameStop Fallout

[jaysabi]

A MassMutual investment subsidiary has agreed to pay $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 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.

MassMutual, who did not admit wrongdoing, settled an investigation over a general failure to supervised its employees and having inadequate procedures in place to detect stock-based social media posts and the personal trading of employees, including the employee that goes by Roaring Kitty on YouTube and is largely credited with starting the GameStop Reddit-fueled meme stock volatility.  Keith Gill, Roaring Kitty's real name, is also under investigation by the Massachusetts Securities Division for failure to report his outside business activity he conducted while employed by MassMutual, which as a registered broker he was required and failed to do.

Gill is separately being sued civilly in a proposed class action lawsuit alleging he committed securities fraud for misrepresenting himself as an amateur trader online while pumping up GameStop stock prices as a registered broker.

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[teosanru]

Hahah looks like the hedge fund that was sacked is trying to make someone a scapegoat to ensure that the whole blame doesn't falls on them, they know it was impossible to target the reddit group as there was absolutely no wrongdoing on their part so they have decided to catch the brokers involved instead. The cycle would go on again, they are blaming the company, the company would eventually blame this on their employees and sack them, at the end they will make a middle class suffer.

Even ironic was how they are scape goating poor Keith Gill, video was online since one year in public domain, blaming him for this thing is the most stupidest thing to do, even we are blaming people they should even add Elon Musk in the list for his tweet regarding "Game Stonk".

[Fortify]

A MassMutual investment subsidiary has agreed to pay $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 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.

MassMutual, who did not admit wrongdoing, settled an investigation over a general failure to supervised its employees and having inadequate procedures in place to detect stock-based social media posts and the personal trading of employees, including the employee that goes by Roaring Kitty on YouTube and is largely credited with starting the GameStop Reddit-fueled meme stock volatility.  Keith Gill, Roaring Kitty's real name, is also under investigation by the Massachusetts Securities Division for failure to report his outside business activity he conducted while employed by MassMutual, which as a registered broker he was required and failed to do.

Gill is separately being sued civilly in a proposed class action lawsuit alleging he committed securities fraud for misrepresenting himself as an amateur trader online while pumping up GameStop stock prices as a registered broker.

It's such a cop out that any person or company is allowed to "settle an investigation without admitting wrongdoing". If the legal system feels it has enough evidence to convict these people then it should be forced to fully play out in court or the case should be dropped entirely on the assumption of innocent. You see that phrase far too often now and it makes a farce of the judicial system, showing that if you have enough money then the laws are flexible in your favor. I don't have any sympathy for these people who were hyping up the stock for their own financial gains nor the short traders who wanted to crush this company, but a lot of naive people got caught up in this mess without fully understanding how much money they could lose.

[dothebeats]

Imagine having lots of evidence to pin the organization down and ask for more settlement fees but instead, you settled with a mediocre amount and pinned down another person which clearly has little fault on what had transpired. I feel bad for Keith Gill for being blamed for most of what happened on the GameStop fiasco albeit having only little participation, though he has, at some point, made mistakes by not declaring that he is personally trading stocks while being employed at a broker.

It's such a cop out that any person or company is allowed to "settle an investigation without admitting wrongdoing". If the legal system feels it has enough evidence to convict these people then it should be forced to fully play out in court or the case should be dropped entirely on the assumption of innocent. You see that phrase far too often now and it makes a farce of the judicial system, showing that if you have enough money then the laws are flexible in your favor. I don't have any sympathy for these people who were hyping up the stock for their own financial gains nor the short traders who wanted to crush this company, but a lot of naive people got caught up in this mess without fully understanding how much money they could lose.

Justice and everything works for you so long as you have a big fat stash of cash at your disposal. They're worth billions, and that alone is enough for justice to work for them.

[zanezane]

Now they're calling it a manipulation but when they do it everyday to other companies to make money shorting their stocks, it's just a normal day, that's a pretty deplorable capitalist move right there if I've seen one.

[The Sceptical Chymist]

they know it was impossible to target the reddit group as there was absolutely no wrongdoing on their part so they have decided to catch the brokers involved instead. The cycle would go on again, they are blaming the company, the company would eventually blame this on their employees and sack them, at the end they will make a middle class suffer.

Say what, now?  The middle class didn't suffer at all because of the Game Stop shenanigans as far as I know.  If anything, those Reddit retards (who I assume are pretty middle class) made out like bandits because of their manipulation of GME stock.  But you can't have people who work for financial institutions doing that, else there would be utter chaos in the markets. 

MassMutual was right to discipline Roaring Kitty for making social media posts related to Game Stop.  Can you imagine if stock brokers or hedge fund/mutual fund managers were allowed to make bullish statements anonymously on sites like Reddit?  There would be so much manipulation that nobody would ever know the true value of anything because of all the noise.

[teosanru]

they know it was impossible to target the reddit group as there was absolutely no wrongdoing on their part so they have decided to catch the brokers involved instead. The cycle would go on again, they are blaming the company, the company would eventually blame this on their employees and sack them, at the end they will make a middle class suffer.

Say what, now?  The middle class didn't suffer at all because of the Game Stop shenanigans as far as I know.  If anything, those Reddit retards (who I assume are pretty middle class) made out like bandits because of their manipulation of GME stock.  But you can't have people who work for financial institutions doing that, else there would be utter chaos in the markets. 

MassMutual was right to discipline Roaring Kitty for making social media posts related to Game Stop.  Can you imagine if stock brokers or hedge fund/mutual fund managers were allowed to make bullish statements anonymously on sites like Reddit?  There would be so much manipulation that nobody would ever know the true value of anything because of all the noise.

Seriously? You think these hedge fund managers don't make such statements? Switch on any business finance channel like Bloomberg or CNN, all you would find is different experts giving their opinions about different stonks, that shit is even more dangerous than randomly saying things on twitter!

Hedge fund managers try to create as much buzz as possible for their portfolio and about the great growth they see in Economy just to shape the consumer sentiment. Won't say Roaring kitty was very right, but calling him out after a year gives clear signs of scapegoating him. Also I don't know the American SEC laws precisely but if it's not proved illegal then I am stern that roaring kitty is nowhere wrong, ethics are the first thing these hedge fund managers screw for money.

[jaysabi]

A MassMutual investment subsidiary has agreed to pay $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 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.

MassMutual, who did not admit wrongdoing, settled an investigation over a general failure to supervised its employees and having inadequate procedures in place to detect stock-based social media posts and the personal trading of employees, including the employee that goes by Roaring Kitty on YouTube and is largely credited with starting the GameStop Reddit-fueled meme stock volatility.  Keith Gill, Roaring Kitty's real name, is also under investigation by the Massachusetts Securities Division for failure to report his outside business activity he conducted while employed by MassMutual, which as a registered broker he was required and failed to do.

Gill is separately being sued civilly in a proposed class action lawsuit alleging he committed securities fraud for misrepresenting himself as an amateur trader online while pumping up GameStop stock prices as a registered broker.

It's such a cop out that any person or company is allowed to "settle an investigation without admitting wrongdoing". If the legal system feels it has enough evidence to convict these people then it should be forced to fully play out in court or the case should be dropped entirely on the assumption of innocent. You see that phrase far too often now and it makes a farce of the judicial system, showing that if you have enough money then the laws are flexible in your favor. I don't have any sympathy for these people who were hyping up the stock for their own financial gains nor the short traders who wanted to crush this company, but a lot of naive people got caught up in this mess without fully understanding how much money they could lose.

The alternative is litigation, which is expensive for the government to pursue.  Since this isn't a criminal procedure (enforcement actions by regulators are civil proceedings, not criminal), the worst that would happen is a financial penalty anyway.  So whether they "admit" wrongdoing or not is of no great significance since in either case it will result in financial penalties at best, and by just settling the case and paying a fine the regulator gets what it would have gotten anyway (a fine) and both the government and the company save the expense of pursing the case in court.

[jaysabi]

Imagine having lots of evidence to pin the organization down and ask for more settlement fees but instead, you settled with a mediocre amount and pinned down another person which clearly has little fault on what had transpired. I feel bad for Keith Gill for being blamed for most of what happened on the GameStop fiasco albeit having only little participation, though he has, at some point, made mistakes by not declaring that he is personally trading stocks while being employed at a broker.

It's such a cop out that any person or company is allowed to "settle an investigation without admitting wrongdoing". If the legal system feels it has enough evidence to convict these people then it should be forced to fully play out in court or the case should be dropped entirely on the assumption of innocent. You see that phrase far too often now and it makes a farce of the judicial system, showing that if you have enough money then the laws are flexible in your favor. I don't have any sympathy for these people who were hyping up the stock for their own financial gains nor the short traders who wanted to crush this company, but a lot of naive people got caught up in this mess without fully understanding how much money they could lose.

Justice and everything works for you so long as you have a big fat stash of cash at your disposal. They're worth billions, and that alone is enough for justice to work for them.

Keith Gill definitely acted fraudulently, he's not a scapegoat here.  To recap:
1.  He lied about being an amateur investor to the public. In fact he was a registered broker, a designation that requires professional training, passing rigorous securities examinations, and which is regulated by securities laws.
2.  He hid his stock hyping activities on social media from his employer.  He has a professional duty to disclose those activities to his employer so they can be monitored for conflicts of interest and ensure his outside business activities don't interfere with the best interest of the firm's clients.
3.  He hid his securities transactions from his employer, which for the same reason has a duty to monitor for conflicts of interest and to ensure he doesn't use material non-public information from the firm to gain an advantage in his personal trading.  (He didn't hide it for this reason, but regardless, failure to disclose violates the firm's policies and the general rules on integrity in the securities industry.)

[so98nn]

Now they're calling it a manipulation but when they do it everyday to other companies to make money shorting their stocks, it's just a normal day, that's a pretty deplorable capitalist move right there if I've seen one.

There is saying, "the one who gets caught while sniffing, is the real thief". The same thing applies here, now that Gill is caught manipulating the market his the one wrongdoing. There are even great examples who are live ones like Elon Musk, whose manipulating the market all the time. But what to say the Senator himself is Elon's follower so he does not see it as market manipulation. That's the normal person and he cant be caught because does have billions in his left pocket and who knows how many powerful peeps in the right pocket!
Now unfortunately Gill does not have both of them (or whatever he has is not much). His one pocket is surely light weight. 

[Kittygalore]

There is saying, "the one who gets caught while sniffing, is the real thief". The same thing applies here, now that Gill is caught manipulating the market his the one wrongdoing. There are even great examples who are live ones like Elon Musk, whose manipulating the market all the time.

I feel like Gill was part of the plan of Mass Mutual, they needed a fall guy and so they chose Gill to be that person, the company won't be hit too much by this fall out but Gill is going to have his life collapse right in his face.

[paxmao]

Not much of a fine compared with the profit of moving shorts in media and nothing compared to the effects that this type of behaviour has had on the market actors, who are now afraid to short even the most decrepit and decadent companies with awful results sheets. This is not healthy for the market and I believe the regulator has failed to achieve any deterrent for the future.

[jaysabi]

Now they're calling it a manipulation but when they do it everyday to other companies to make money shorting their stocks, it's just a normal day, that's a pretty deplorable capitalist move right there if I've seen one.

There is saying, "the one who gets caught while sniffing, is the real thief". The same thing applies here, now that Gill is caught manipulating the market his the one wrongdoing. There are even great examples who are live ones like Elon Musk, whose manipulating the market all the time. But what to say the Senator himself is Elon's follower so he does not see it as market manipulation. That's the normal person and he cant be caught because does have billions in his left pocket and who knows how many powerful peeps in the right pocket!
Now unfortunately Gill does not have both of them (or whatever he has is not much). His one pocket is surely light weight.  

The difference between Gill and Musk is that Gill created false personas to hype his personal holdings, and Musk did not.  You can't even say that Musk is trying to hype things for his personal benefit, as opposed to just stroking his ego by watching you all freak out over everything he says and does.  Gill had a position he was trying to make more valuable through fraudulent actions.  You can't say the same about Musk. Two entirely different scenarios.

[Gyfts]

This seems a lot less severe than what Robinhood had to deal with when they limited trading on their platform during the GME craze.

If you wanted to play conspiracy theorist, one might suggest they were actively colluding with the private companies doing the short selling. Keep in mind, most brokerage firms did not limit GME trading - just Robinhood.

[jaysabi]

There is saying, "the one who gets caught while sniffing, is the real thief". The same thing applies here, now that Gill is caught manipulating the market his the one wrongdoing. There are even great examples who are live ones like Elon Musk, whose manipulating the market all the time.

I feel like Gill was part of the plan of Mass Mutual, they needed a fall guy and so they chose Gill to be that person, the company won't be hit too much by this fall out but Gill is going to have his life collapse right in his face.

No.  Mass Mutual didn't know and didn't have an positions in the stocks.  Nothing Gill did benefited them, in fact he only caused reputational harm to the company by exposing how inadequate their compliance procedures were that they couldn't detect his social media activities.
I feel like Gill was part of the plan of Mass Mutual, they needed a fall guy and so they chose Gill to be that person, the company won't be hit too much by this fall out but Gill is going to have his life collapse right in his face.

[jaysabi]

This seems a lot less severe than what Robinhood had to deal with when they limited trading on their platform during the GME craze.

If you wanted to play conspiracy theorist, one might suggest they were actively colluding with the private companies doing the short selling. Keep in mind, most brokerage firms did not limit GME trading - just Robinhood.

That's because most brokerage firms didn't have near the exposure to GME that robinhood did through its client base.  There was no conspiracy.  The market makers demanded more collateral from robinhood to continue having access to that market as the frenzy was making it prohibitively expensive for the market makers to continue facilitating trades in that market, and robinhood didn't have the cash for it.  Eventually they were able to raise a ton of cash on an emergency basis for collateral, but until then they were cut off from the market and were forced to cut their customers off as a result.  I suppose if you don't understand what was going on behind the scenes it's easy to just call it a conspiracy theory, especially when you want to believe in the boogeyman, and most people around here do.  Doesn't make them any less stupid for doing so.

[sikke]

I'm not sure why they should be the scapegoat?

It seems like that the hedgies and their friends just need someone to blame for the mass liquidation of their positions.

If anything, Robinhood should be liable for their pausing of trading activities for quite a while following the GME short squeeze. That was completely uncalled for and definitely warrants some legal action imho.

[jaysabi]

they know it was impossible to target the reddit group as there was absolutely no wrongdoing on their part so they have decided to catch the brokers involved instead. The cycle would go on again, they are blaming the company, the company would eventually blame this on their employees and sack them, at the end they will make a middle class suffer.

Say what, now?  The middle class didn't suffer at all because of the Game Stop shenanigans as far as I know.  If anything, those Reddit retards (who I assume are pretty middle class) made out like bandits because of their manipulation of GME stock.  But you can't have people who work for financial institutions doing that, else there would be utter chaos in the markets. 

MassMutual was right to discipline Roaring Kitty for making social media posts related to Game Stop.  Can you imagine if stock brokers or hedge fund/mutual fund managers were allowed to make bullish statements anonymously on sites like Reddit?  There would be so much manipulation that nobody would ever know the true value of anything because of all the noise.

Seriously? You think these hedge fund managers don't make such statements? Switch on any business finance channel like Bloomberg or CNN, all you would find is different experts giving their opinions about different stonks, that shit is even more dangerous than randomly saying things on twitter!

Hedge fund managers try to create as much buzz as possible for their portfolio and about the great growth they see in Economy just to shape the consumer sentiment. Won't say Roaring kitty was very right, but calling him out after a year gives clear signs of scapegoating him. Also I don't know the American SEC laws precisely but if it's not proved illegal then I am stern that roaring kitty is nowhere wrong, ethics are the first thing these hedge fund managers screw for money.

Making statements about stocks isn't illegal, but making false representations while you're doing it is fraud and that is illegal.  When a Bill Ackman goes on CNBC and says "We're shorting this stock because it's a garbage company and it's going to zero" there's nothing wrong with that.  But that's not what Keith Gill did.  He created several online alter egos and pretended to be an amateur trader in order to get people to trust him and buy into the narrative that the little people could band together and stick it to the professional traders, never revealing that he himself was actually a professional trader.  That's fraud.  That's illegal.

[fiulpro]

Hahah looks like the hedge fund that was sacked is trying to make someone a scapegoat to ensure that the whole blame doesn't falls on them, they know it was impossible to target the reddit group as there was absolutely no wrongdoing on their part so they have decided to catch the brokers involved instead. The cycle would go on again, they are blaming the company, the company would eventually blame this on their employees and sack them, at the end they will make a middle class suffer.

Even ironic was how they are scape goating poor Keith Gill, video was online since one year in public domain, blaming him for this thing is the most stupidest thing to do, even we are blaming people they should even add Elon Musk in the list for his tweet regarding "Game Stonk".

The sad part is "the company would be able to get up from all of this but the employee would not find any job after this and not only that be is liable to pay all the fine in the world"

Corporate scheme is so unfair, at the same time, monitoring every single person in the company within the bounds of privacy is something that a big company like them would surely do anyways but they are just trying to hide how they messed up and ignoring the fact. Who know ?

We will never be sure since it's straight away fine, what about the investigation as well, it is a democratic nation isn't it ?

They should definately dig deeper, then only they would be able to find out who was actually behind all of this, instead of putting fine the very moment.

[Hydrogen]

This says MassMutual was fined $4.75 million for failing to monitor Keith Gill. (Slap on the wrist for them, aren't they a billion dollar investment firm?)

A MassMutual investment subsidiary has agreed to pay $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 shares.

This says Keith Gill touted gamestop stock in his spare time, when he wasn't on the job. Could they monitor him if he did this when he wasn't at work? I would be interested to know how they were expected to accomplish this with reasonable policy.

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.

This says MassMutual failed to review social media usage or catch "excessive trading". What does excessive trading even mean? According to the article, it means he was making too much money and his individual trades were greater than $700,000, beyond the limit imposed by the company. Not really criminal, but treated as if it were a severe crime.

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 reason the conspiracy theory movement was founded. Was due to people choosing not to accept these questionable explanations offered by the media.

If the media fails to explain things in a way that satisfies people. They will inevitably reject the media explanation, to form their own theories and conclusions. Necessity being the mother of all invention.

[jaysabi]

Not much of a fine compared with the profit of moving shorts in media and nothing compared to the effects that this type of behaviour has had on the market actors, who are now afraid to short even the most decrepit and decadent companies with awful results sheets. This is not healthy for the market and I believe the regulator has failed to achieve any deterrent for the future.

Well the fine wasn't designed to address any of the things you mentioned.  First, Mass Mutual had nothing to do with any of the activities Keith Gill was undertaking.  Gill wasn't working on behalf of Mass Mutual when he made his trades or his social media posts.  Second, touting market moves isn't illegal, but the manner it which Gill did it was fraudulent, but again this has nothing to do with Mass Mutual.  Third, if short sellers are afraid to over-short certain companies because now they're at a high risk of being squeezed, I'm not really certain that's a net bad thing.  Shorting always carries more risk than buying long because your potential loss is infinite, and despite knowing this they put themselves in a vulnerable position anyway which was reckless and they have no one to blame for that but themselves.  The amount GME was shorted created a massive incentive for someone to put the screws to them, and Keith Gill eventually found a way to do that- just unfortunately committing fraud was a major component of it.

What this fine was about is failure to supervise employees adequately, and the fine and the bad press is going to have exactly the effect the regulator desires.  If you think other insurance companies and brokers aren't reviewing their social media policies and personal trading policies in this aftermath to make sure they don't get blindsided by something like this... well I wouldn't bet on that is all I'm saying.

[jaysabi]

This says MassMutual was fined $4.75 million for failing to monitor Keith Gill. (Slap on the wrist for them, aren't they a billion dollar investment firm?)

A MassMutual investment subsidiary has agreed to pay $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 shares.

It's a life insurance company, but yes, they are large.  About $560 billion in assets under management in 2020.  This is a state regulator though, and state regulator fines are rarely every eye popping amounts.  Ultimately for the thing they were charged with (failure to adequately supervise employees), this seems like an adequate penalty.

This says Keith Gill touted gamestop stock in his spare time, when he wasn't on the job. Could they monitor him if he did this when he wasn't at work? I would be interested to know how they were expected to accomplish this with reasonable policy.

Yes, in the securities industry employees are required to report ALL their securities transactions and outside business activities to their employers.  It doesn't matter if you do it in your spare time or not, anything you do that is securities related needs to be tracked under rules established by the regulators to ensure there are no conflicts of interest and in the name of professional integrity.  Keith Gill did not do this, and was actively hiding his activities, which is why it's a problem.  Mass Mutual got hit because the regulator felt like didn't have adequate supervision since they weren't able to detect his activities, which he hid by posting under pseudonyms and not using his real name.

This says MassMutual failed to review social media usage or catch "excessive trading". What does excessive trading even mean? According to the article, it means he was making too much money and his individual trades were greater than $700,000, beyond the limit imposed by the company. Not really criminal, but treated as if it were a severe crime.

No, it has nothing to do with how much money you're making.  It has to do with how many trades he made that Mass Mutual was required to know about and didn't.  If it was one trade they didn't catch, that's not as much of a violation as a pattern of trading that all went undetected.  For the purpose of ensuring employees aren't committing transactions to benefit themselves at the expense of the firm's clients, this is a very serious issue.  The whole investment industry is predicated on being able to trust the people managing your money, so that's why there's so many rules about monitoring employees.

The reason the conspiracy theory movement was founded. Was due to people choosing not to accept these questionable explanations offered by the media.

If the media fails to explain things in a way that satisfies people. They will inevitably reject the media explanation, to form their own theories and conclusions. Necessity being the mother of all invention.

There's nothing questionable about the explanation here.  People invent conspiracy theories because they're too stupid to understand the real situation.  That's not an indictment of the media, but the idiots.