A Massachusetts Mutual Life Insurance Co. subsidiary agreed to pay a $4 million fine to settle an inquiry from Massachusetts securities regulators into the social-media and trading activity of its employees, including well-known GameStop Corp. investor Keith Gill.

Mr. Gill, known as “Roaring Kitty” on YouTube and “DeepF—ingValue” on Reddit, became an Internet folk hero in January, thanks to his prescient bets on GameStop stock. For months leading up to the GameStop trading frenzy in January—during which nonprofessional traders...

A Massachusetts Mutual Life Insurance Co. subsidiary agreed to pay a $4 million fine to settle an inquiry from Massachusetts securities regulators into the social-media and trading activity of its employees, including well-known GameStop Corp. investor Keith Gill.

Mr. Gill, known as “Roaring Kitty” on YouTube and “DeepF—ingValue” on Reddit, became an Internet folk hero in January, thanks to his prescient bets on GameStop stock. For months leading up to the GameStop trading frenzy in January—during which nonprofessional traders sent the company’s shares soaring to a record high—Mr. Gill posted videos and messages discussing why he was putting large sums of money into the stock.

At the time, Mr. Gill was registered as a broker at MML Investors Services LLC, a broker-dealer and investment adviser whose parent company is MassMutual. His role was director of education and wellness, and he was responsible for creating educational materials used by the company and its client-facing registered agents. As an employee, Mr. Gill himself didn’t provide services to retail customers, securities regulators said, and, according to a document outlining the settlement, he never mentioned his name or affiliation with MML on the at least 80 videos posted to his YouTube channel. He left the company in late January, coinciding with the GameStop frenzy.

The office of William Galvin, the Secretary of the Commonwealth of Massachusetts, opened an inquiry into the matter earlier this year. His office said that while MML prohibited broker-dealer employees from discussing securities on social media, the company didn’t have “reasonable policies and procedures in place to detect and monitor” such activity. At one point in mid-January, Mr. Galvin’s office said, two employees including Mr. Gill’s manager were made aware of his social-media activity. MML didn’t take any immediate action, the regulator said.

Mr. Galvin’s office also said the company didn’t have procedures in place to detect brokers’ trading activity on personal accounts. His office said MML failed to discover that Mr. Gill had at times been trading in large sums. A third-party electronic monitoring system used by MML should have flagged transactions of more than $250,000 in a single security. But Mr. Galvin’s office said the company had disabled tracking for that so-called “excessive-trading rule.” In early January, Mr. Galvin’s office said, Mr. Gill executed two GameStop trades for sums greater than $700,000.

MassMutual agreed to pay $4 million to settle the inquiry from securities regulators.

Photo: Jonathan Wiggs/The Boston Globe/Getty Images

The compliance problems were systemic and not unique to Mr. Gill, Massachusetts securities agents wrote in the document outlining the settlement. They said MML was in violation of state securities laws that require companies to supervise their brokers.

As part of the settlement, MML neither admitted nor denied the claims. “MassMutual is pleased to put this matter behind us, avoiding the expense and distraction associated with protracted litigation,” the parent company said in a statement.

Mr. Gill didn’t respond to a request for comment.

Mr. Gill “was licensed under [MML], and we look to them to police their own members or their agents,” Mr. Galvin said in an interview. “It’s almost stunning [that the company] could be so clueless when it comes to their employees.” He added that the incident spoke to the “lack of oversight on their part” and “created chaos in the marketplace.”

As part of the settlement, the company agreed to undergo an independent compliance review of its social-media and trading policies for its brokers. It will also be subject to a three-year compliance audit.

An inquiry into Mr. Gill’s registration in Massachusetts is pending, Mr. Galvin’s office said.

Earlier

Executives of Robinhood and other companies testified before Congress in mid-February after January’s trading frenzy involving GameStop and other securities raised concerns about the integrity of the U.S. stock market and the rules that govern it. Photo illustration: Ang Li The Wall Street Journal Interactive Edition

Write to Caitlin McCabe at caitlin.mccabe@wsj.com