More Losses, and More Scrutiny, as GameStop Plunges Again

Keith Gill, the bull who helped spark a stock frenzy with Reddit posts and YouTube videos, appears to be taking a break from social media

“Roaring Kitty” has gone quiet.

Keith Gill, the GameStop bull who helped spark a stock frenzy with his Reddit posts and YouTube videos, appears to be taking a break from social media as the state’s securities regulator looks into whether he or his former employer, MassMutual, broke any rules.

The Wilmington resident told the Reddit forum WallStreetBets on Wednesday: “heads up gonna back off the daily updates for now.”

As usual, he attached a screenshot of what appeared to be a brokerage summary of his GameStop holdings. It showed gains of $7.9 million, or more than 1,000 percent, and a balance of $22.4 million, with 60 percent in cash.

Gill, 34, hasn’t posted on his “Roaring Kitty” YouTube channel, which has 372,000 subscribers, for a week. Following that Jan. 22 livestream, GameStop’s stock price soared from $65 to more than $480, as investors on Reddit mounted a grass-roots rally and reveled as they inflicted steep losses on hedge funds that had bet against the videogame retailer.

But the Reddit rebellion against Wall Street overlords was short-lived. The stock has tumbled this week, closing Thursday at $53.50, a one-day decline of 42 percent.

Even as the air rushes out of the GameStop bubble, regulators are trying to piece together what happened — and whether any securities laws were violated.

Massachusetts Secretary of State William Galvin said Thursday that he was looking into Gill’s role at MassMutual, the Springfield financial services company where until last week he worked as a director of financial wellness education. According to an archived page on MassMutual’s website, Gill generated content for its In Good Company initiative, which provides financial “know-how” to employees of corporate clients.

Gill holds licenses to sell most kinds of investments and offer advice, and as a registered broker-dealer agent, he was required to tell his employer about outside business activities. A key question is whether his promotion of GameStop on social media rose to the level of outside investment work or was merely a hobby.

Galvin said his office sent an “extensive records request” to MassMutual last Friday, with questions about Gill’s responsibilities and the company’s policies and processes for supervising registered brokers, including its social media rules. He said the company responded on Monday, explaining that Gill had given notice on Jan. 21, and his last day of employment was a week later. Galvin said MassMutual also told him it had denied Gill’s request when he joined the company for permission to manage investments for a family friend.

“This is not about him. It’s about the bigger issues here — transparency and the adequacy of the licensing process,” said Galvin, whose letter to MassMutual was first reported by The New York Times.

MassMutual declined to comment. Gill didn’t respond to e-mails and voicemails from the Globe.

MassMutual told Galvin that had it been aware of Gill’s social media commentaries on GameStop, he would have been told to stop, or perhaps have been fired. Gill had an obligation to inform his employer, even if he believed his GameStop hype was a personal activity, said Nicholas Stuller, founder of MyPerfectFinancialAdvisor, which matches investors and advisers, and a former executive at a compliance consulting firm.

“Mr. Gill knew better than to not disclose his activity to MassMutual, even if his Reddit activity could be argued as a hobby and not a job,” Stuller said. “Just plain old-fashioned common sense from someone as sophisticated as he would dictate he ask MassMutual if this was acceptable.”

And MassMutual had a responsibility to make sure Gill was following the rules, said Bao Nguyen, a principal at Kaufman Rossin who specializes in assessing compliance risks for broker-dealers.

“If he’s on Reddit or YouTube . . . they should be supervising that kind of activity,” Nguyen said. “There are very few firms out there that allow their representative to tout a particular security.”

As GameStop’s stock plunged Thursday, the mood darkened on WallStreetBets, where posters earlier had gleefully been urging each other to “hold on” and push the stock, which trades with the ticker symbol GME, “to the moon.”

“This was a ride, but we also have to be able to trust each other without spending all day propping each other up via reddit comments,” posted a member using the name “gandergood.” “I need to spend more time elsewhere. I’ll monitor the GME stock price (probably still more than I should), but for now I’ve
gotta check out from reddit during the day.”

Still, gandergood wasn’t giving up. “For those who remain on here, refreshing on a minute-by-minute basis, just know that decreased comments/activity does NOT necessarily mean people are selling . . . I may be MIA, but I’m still f****** HOLDING.”