The YouTuber, known as Roaring Kitty, who became the face of the GameStop stock van and also worked as a broker until last week, could be in trouble right away due to possible violations of federal rules regarding the communication of brokers with the public.
Keith Gill, 34, placed a big bet on GameStop shares more than a year ago and shared his ideas about the stock online in the months leading up to the ‘meme stock’ bubble.
But his comments could create a problem for Massachusetts Mutual Life Insurance Co., which hired him and had the duty to supervise him.
Keith Gill, the YouTuber known as Roaring Kitty, is under investigation by regulators
Security regulators in Massachusetts are said to be investigating Gill and his former day job as director of financial well-being at insurance company MassMutual.
The company told regulators that he was unaware of Gill’s YouTube videos promoting GameStop shares, and that if he had known, he would have asked him to stop or fire him, according to the New York Times.
Although he did not advise specific clients on investments or insurance, he was not exempt from regulations that strictly regulate brokers’ behavior, security lawyers suggested to the Wall Street Journal.
The once obscure YouTuber has become an unlikely celebrity in the clash between small investors and large hedge funds, and is seen by some as a national hero and others as a dangerous disruption of markets.
Gill only considered GameStop a potential investment more than a year ago
The Financial Industry Regulatory Authority (Finra) could take a closer look at Gill
After shares of the struggling video game retailer shot up 1,600 percent in January, while small investors inspired by the WallStreetBets message board on Reddit snapped up the stock to penalize hedge funds betting against it, the bubble collapsed this week and was it more than 70 lower. percent since Monday.
Gill was a director of financial well-being, but was a registered broker. He has already paid out more than $ 13 million to his transactions and has been sitting with another $ 7.6 million in profits since Wednesday, according to a screenshot of his brokerage account he posted on Reddit. At the height of the madness last week, his account was worth nearly $ 48 million.
Gill gave his notice at MassMutual on January 21, but was technically still operating there until January 28, as the GameStop frenzy neared its peak, the company told regulators.
Gill ended his job at MassMutual on January 21 when GameStop shares exploded
He is a licensed security broker, and licensed professionals have an ‘obligation’ to notify their employers of their outside activities, said William Galvin, the Massachusetts secretary of state.
Galvin’s office sent a letter to MassMutual on Friday seeking information about Gill’s service and whether the company was aware of its outside activities.
“I’m not trying anyone’s ability to make access to the market difficult,” Galvin said. “The issue here is transparency.”
Over the past six months, Gill has posted dozens of videos, and the majority relate to his opinion that GameStop shares are undervalued and will rise as others take notice.
Some videos have looked at Gamestop’s achievements and predictions in the past, but even posting online with a pseudonym does not relieve him of regulatory obligations, attorney Susan Light said.
Gill was spotted last week at his rental home in Massachusetts, where he lives with his wife and their two-year-old daughter.
Shares of GameStop, which rose 1,800 percent in January in a speculative bubble fueled by small investors, fell nearly 84 percent in the first four days of this month.
An average Joe can go to a website and say, ‘I like XYZ shares.’ A realtor can not do that. It would make sense for the Financial Industry Regulatory Authority (Finra) to be interested in looking into this. ‘
“If you have a registered person who trades securities outside the firm and makes recommendations to the general public, it could be a major supervisory mistake,” said Brad Bennett, a former director of Finra’s enforcement of the Journal.
‘After 40 years in the industry, I have no doubt that you are a registered representative [of a brokerage firm]”You should not communicate with anyone on Reddit,” said Bill Singer, a legal defense attorney. “It’s the safest thing to do.”
Gill’s videos contain an indemnity stating that investors should consult a financial advisor before making an investment decision and “should not view any opinion on this YouTube channel as a specific incentive to make a specific investment.”
Roaring Kitty went on to create topical memes about the rising price of the stock
Andrew Calamari, a lawyer at Finn Dixon & Herling and a former director of the Securities and Exchange Commission’s New York office, told the Times it was too early to determine whether Gill had violated any security regulations.
But he said Gill could violate the company’s rules at MassMutual if he did not get permission for his posts on Reddit and YouTube.
“Businesses do not allow employees to make inventory predictions,” he said of employees other than analysts.
Gill has not posted on YouTube since January 22, and on Wednesday he announced on Reddit that he would withdraw from the daily update of his GameStop position there.
He was mostly silent about the controversy, apart from an interview with the Wall Street Journal last week.
“I did not expect it,” he said. “This story is so much bigger than me … I support these retail investors in their ability to make a statement.”
In June 2019, Gill made an initial investment in GameStop of approximately $ 53,000. He later added the investment and plowed in a total of $ 745,991.
A five-day attention price over the GameStop share price shows the sharp drop from its peak last week
The share price of GameStop is seen in one year and shows that the shares rise and fall
In his latest YouTube videos, filmed in his basement, he celebrated his success with as many as 200,000 fans, wearing sunglasses and a sweatband to hold back his shoulder-length hair and the chicken tenders (the mascot of his followers ) in Prosecco.
Gill gained notoriety in the Reddit trading forum WallStreetBets when he posted regular updates of his ‘YOLO’ [You Only Live Once]trading starts in 2019 under the username DeepF *** ingValue.
But Gill told the Journal his original decision to buy – first ridiculed by WallStreetBets before being honored – was based on the company’s principles.
“People were quick to say GameStop was the next Blockbuster,” he said. He refers to the video store, but destroyed by the decline in retail and the rise of streaming services.
‘It seems that many people have not dug deeper. “It was a gross misrepresentation of the event,” he said.