Under the name of Roaring Kitty, Keith Gill has become something of a popular online hero for his dedication to GameStop, the video game retailer at the center of a commercial frenzy that has pushed his stock price into the stratosphere.
But now a regulator in Massachusetts wants to know more about Gill, a registered securities broker, and his former job as director of financial well-being education at a Boston-based insurance company.
Inspired in part by Gill’s fans, thousands of small investors raised GameStop’s stock to $ 483 each and made Gill fabulously rich on paper. A photo he posted last week on the Reddit WallStreetBets forum showed that his GameStop investment was worth $ 48 million, although his actual return could not be verified independently.
But Gill’s former employer, MassMutual, told securities regulators in Massachusetts that he was unaware that Gill had spent more than a year posting about GameStop on social media, online forums and YouTube. The insurer also told regulators that if it had known about Gill’s outside activities, she would have asked him to stop or possibly get fired.
MassMutual, officially known as Massachusetts Mutual Life Insurance Company, also informed regulators that Mr. Gill gave his notice on January 21, but technically he was still an employee of the company and its securities and investment advisory arm, MML Investors Services, until January 28 – the week that GameStop’s shares increased the most.
In particular, the Massachusetts regulator is investigating whether Mr. Gill or MassMutual broke any rules.
Licensed professionals have an “obligation” to inform their employers about their outside activities, said William Galvin, Massachusetts community secretary.
On Friday, Mr. Galvin’s office sent a letter to MassMutual’s general counsel seeking information about Mr. Gill’s employment status and whether the company was aware of its outside activities promoting GameStop.
The letter also sought details about the “company’s process for identifying undisclosed business activities” and for monitoring an employee’s use of social media.
Debra O’Malley, a spokesman for Galvin’s office, said that much of MassMutual’s response was confidential because the investigation is open. But she confirmed the date of Gill’s departure and reiterated the company’s claim that it was unaware of its activities.
O’Malley said MassMutual told securities regulators that he had previously denied Gill’s request to do a side job in managing an investment portfolio for a family friend after he joined the company in April 2019.
MassMutual spokeswoman Paula Tremblay said in an e-mailed statement that Gill was no longer employed by the company and that the matter was being considered. She declined to comment further.
Gill, 34, did not respond to messages asking for comment. He’s been more silent than talking to The Wall Street Journal. In its article, published on Friday, The Journal described Mr. Gill as having recently worked in marketing for MassMutual.
Mr. Gill hasn’t 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 put the value of his stake in GameStop at more than $ 8.6 million. The image also showed a cash flow of almost $ 14 million.
GameStop shares have lost more than two-thirds of their value since closing at $ 347 on January 27. The shares rose nearly 3% on Wednesday and closed above $ 92.
The GameStop saga has federal regulators and lawmakers promising more scrutiny.
Members of Congress have already suggested that they would examine the practices of trading platforms such as Robinhood, which restricted retail trade at the height of the frenzy. And the Chamber’s Financial Services Committee has scheduled a hearing on February 18 to discuss the volatility of GameStop’s shares, as well as the effect of short sales on the market, the downward bets that some retail investors have had fun trying to punish. On Wednesday, Representative Maxine Waters, the California Democrat who is chairman of the committee, told the Cheddar financial network that she he wanted Mr. Gill to appear at the hearing.
Treasury Secretary Janet L. Yellen also asked federal financial regulators, including the Securities and Exchange Commission and the Federal Reserve, to attend a meeting on the GameStop rampage, the department said on Wednesday.
The financial services industry in recent years has adopted a series of regulations and policies on the use of social media by financial professionals.
The Financial Industry Regulatory Authority – the leading self-regulatory organization in the securities industry – says that financial services professionals should avoid making “false and misleading statements, exaggerated statements and material omissions” on social media. FINRA guidelines require brokers and other financial services companies to “supervise business-related content” that employees publish.
Gill’s Roaring Kitty videos included a disclaimer saying that investors should consult with a financial advisor before making any investment decision and “should not treat any opinion expressed on this YouTube channel as a specific incentive to make a particular investment” .
Andrew Calamari, a lawyer at Finn Dixon & Herling and a former director of the New York Securities and Exchange Commission office, said it was too early to determine whether Gill had violated any securities regulations. But Mr. Gill could have violated company rules had he not been allowed to post on Reddit and YouTube.
“Companies don’t allow employees to go out and make predictions about stocks,” he said of employees who are not analysts. Many financial companies also require their employees to disclose whether they have brokerage accounts at other companies to monitor their business activities, he added.
Mr. Gill, as a securities broker, is registered with FINRA. His broker record does not indicate that he has outside commercial activities. FINRA’s rules prohibit brokers from filling in incomplete or misleading information about themselves.
It is not clear whether MassMutual has regulatory problems. Companies can be held responsible for not supervising employees, but if Mr. Gill has bypassed the company’s processes for monitoring employees’ use of social media, then this may not be the fault.
For many of the small investors who have invested in GameStop and other stocks in the hope of damaging short hedge funds, Gill’s night activities may not be a concern.
But Galvin said his office is examining the issue to ensure the integrity of markets and securities professionals who advise on stocks. Retail investors need to know everything about the people they invest in or get advice, he said.
“I’m not trying to inhibit anyone’s ability to access the market,” said Galvin. “The issue here is transparency.”
Nathaniel Popper contributed reports.