Massachusetts regulators sought the repeal of Robin HoodThe broker-dealer license after he was accused of encouraging inexperienced investors to conduct risky transactions without limits, while the online brokerage demanded the invalidation of a new rule underlying the case.
Massachusetts Secretary of State Bill Galvin asked for the revocation in a revised administrative case announced shortly after Robinhood sued Boston State Court to challenge a rule of fiduciary conduct that took office last year.
Robinhood, which seeks to make itself public through an initial public offering, in a blog post called the regulator “elitist” and said it wanted to “restore the financial barriers that Robinhood was founded to break.”
Galvin announced the case against Robinlo, based in Menlo Park, California, in December, before social media-driven concentration on stocks like GameStop, driven by retail investors using Robinhood and other apps, raised consumer prices. their actions.
Galvin, the state’s top securities regulator, accused Robinhood of using aggressive tactics to lure inexperienced investors and fail to prevent disruptions to its platform.
He alleged the applicationThe service-based service used strategies that treated commerce as a game to attract young and inexperienced customers, including dropping confetti for every transaction made in its application.
The case is the first enforcement action that was implemented under a state fiduciary rule that went into effect in September and raised the standard for investment advice for brokers.
Robinhood in her lawsuit argued that Galvin had no authority to overturn a long-held Massachusetts main court finding that brokerage firms like her do not consider themselves trustees of their clients.
He said the state legislature has done nothing to change the court’s determination and that it had no authority to adopt its rule.
Robinhood said the rule also creates an obstacle to federal regulation, the U.S. Securities and Exchange Commission in 2019 it adopted its own rule governing brokerage firms that explicitly rejected the rule Galvin was applying.
Galvin, considered nationally as an aggressive state securities regulator, in a statement called the lawsuit “another example of Robinhood’s total rejection of accountability to its customers.”