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It’s not every day that an insurance company gets fined $4 million for failing to properly manage a RoaringKitty, providing schaden-fodder for retail traders on social media.
But with summer almost over, the news cycle clearly wants to live a little.
Massachusetts regulators have fined MassMutual $4 million for failing to notice that its former employee Keith Gill had become a full-blown social-media folk hero who played a key role in the frenzied buying of GameStop
GME,
stock that caught many hedge funds unaware in January, resulting in a chaotic short squeeze, unprecedented market turmoil and a congressional inquiry.
Gill, known online as “RoaringKitty,” was employed by MassMutual as a “financial wellness education director” until late January. In that registered broker-dealer role, Gill was responsible for the creation of educational materials for clients looking to play the markets, or potential clients looking to do so.
MassMutual, according to state regulations, is supposed to monitor any social-media accounts of its registered broker-dealers for recommendations of particular stocks.
Regulators now say that Gill’s roughly 590 tweets about investing in GameStop and his more than 250 hours of YouTube videos — during which Gill wore a red headband and colorfully discussed his bull case for the heavily-shorted videogame retailer stock — managed to slip by his employer unnoticed, and that is apparently not great oversight.
And while some saw Thursday’s fine as a signal that authorities will crack down on the key players in January’s short squeeze, many of the people still fighting that fight took the news rather differently.
On Reddit, where Gill goes by the nom de guerre “DeepF***ingValue,” users were quick to make mention that any of Gill’s possible misdeeds were nothing compared to what they allege is widespread market manipulation by hedge funds, market makers and regulators, and took very real enjoyment that a large financial institution was paying the bill for Gill’s actions.
“He did nothing wrong. Boomers mad,” claimed user thetatheropy, a sentiment that was shared by many but not all on the subreddit that made Gill a celebrity: r/Wallstreetbet.
“Weird how they managed to fine someone related to the retail trader side of this and I haven’t seen a fine yet -correct me if I’m wrong- with the hedge funds,” chimed in lagavulin_16_neat.
Others tied the actions by a regulator to pursue Gill via his former employer as another example of the powers-that-be failing to recognize any naked short-selling or other market manipulation by hedge funds and institutional trading firms.
That growing theme has come to dominate most discussions, including the one surrounding the Securities and Exchange Commission investigation into January’s short squeeze that included stock like AMC Entertainment
AMC,
and BlackBerry
BB,
the results of which will reportedly be coming to a Dropbox near you any day now.
According to many retail traders on social media, that report will likely address the actions of people like Gill and the practice of “payment for order flow” that powers no-fee trading apps like Robinhood
HOOD,
instead of addressing what they see as structural flaws in the stock market that favor well-capitalized short-sellers at the expense of the little guy.
Through that optic, more than a few retail investors saw Thursday’s fine as just another feather in Gill’s everyman folk-hero headband.
“They didn’t punish him,” explained r4rthrowawaysoon. “They punished the company responsible for keeping him from doing stupid things with clients money.”
