Massachusetts securities regulators are looking to withdraw the broker-dealer license of the Robinhood Markets app. If successful, the ban will affect millions of Robinhood customers in the jurisdiction.
According to the head of the securities decision, William Galvin, Robinhood has “continued a pattern of aggressively inducing and enticing trading among its customers – including Massachusetts customers with little or no investment experience.
Before Galvin’s comment in a new administrative complaint, the executive had filed an initial complaint against Robinhood in December 2020. At the time, Galvin’s office said Robinhood illegally targeted inexperienced investors. Galvin said the complaint was to prevent new investors.
In response to the new complaint, Robinhood has filed a lawsuit to counter Massachusetts’s new rule that holds brokers accountable for a fiduciary standard of care, which requires the brokers to act in the best interest of their clients.
Robinhood said in the lawsuit:
“The Massachusetts Securities Division’s new Fiduciary Rule exceeds its authority under both Massachusetts state law and federal law. Robinhood is a ‘self-directed’ brokerage firm that does not make investment recommendations or provide investment advice. By its own terms, the new rule does not apply to self directed firms.”
Recently, Robinhood has had technical challenges which have caused huge losses for customers and have also resulted in legal action against the company.
Image Credits: Pixabay
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