The world of compliance has always had a tendency to be strange and inexplicable. This reputation of the industry is largely influenced by the imposition of certain regulations that are hard to justify, a fact that has become the reason of companies’ annoyance time and again. To deal with it, these companies have come up with ways to bypass the regulatory eye. However, that has hardly resolved the issue. Instead, after observing more and more rule violations, the regulators have been forced to shore up their supervising efforts. Furthermore, their intention to be more vigilant got timely supplemented by technology and all the windows it provided into companies’ operations. Now, that should have been the end of the road for unethical activities across the industries, but if regulatory bodies had technology aiding their purpose, so did the businesses. If there were more ways to stay watchful, there were also a host of new methods for bending the rules, and the latter piece of truth was on full display during a stock frenzy that took place earlier this year. The GameStop debacle left the stock market in complete disarray, and the authorities have now finally decided who will pay the price for it.
MassMutual, a Springfield-based financial services giant, has been slapped with a fine worth $4 million dollars for oversight in the GameStop case. As things transpired, one of the MassMutual’s employees named Keith Gill caused market volatility through unscrupulous methods. Basically, Gill, having established a strong social media following, used his platform to encourage everyone to buy GameStop’s stocks, thus triggering a quick and humongous bump in their value. Once that happened, Gill would sell his own shares in the company for a substantial profit. Nevertheless, to get there, Gill went against MassMutual’s own rulebook. For instance, MassMutual prohibits its dealers from discussing generic securities and company’s business on platforms like social media. Gill, however, would end up making nearly 590 security-related statements on Twitter.
The Secretary of State’s office, who announced the penalty, went on to claim that MassMutual failed to monitor or detect nearly 1,700 trades effected by Gill in the accounts of three other individuals,”
If that wasn’t enough, Gill would also exceed the company’s cap for amount per transaction on multiple occasions, making MassMutual’s lack of supervision look even more serious.
“MassMutual was not as diligent as it should have been in supervising its employees. It took the media less than a day to identify the person behind the Roaring Kitty posts, while his own employer took no notice of his online persona,” says William Galvin, Secretary of State.