The Massachusetts regulator requested the cancellation of Robin Hood’s broker-dealer license on Thursday, on the grounds that the license encourages inexperienced investors to engage in unrestricted risky transactions, while online brokerage firms sued to invalidate the new rules in the case.
Massachusetts Secretary of State Bill Galvin called for the dismissal of the lawsuit in a revised administrative case announced shortly after Robinhood filed a lawsuit in Boston State Court to challenge the standards of trust behavior adopted by his office last year.
Robinhood is seeking a public offering through an initial public offering. The blog stated in a blog post titled “Elite” of the regulator that it is seeking to “restore the financial barriers that Robinhood had to break when it was founded.”
Galvin announced in December its lawsuit against Robinhood, California, after the social media-driven increase in stocks such as GameStop (GME.N) was caused by the use of Robinhood and other apps. Driven by retail investors.
Galvin, the state’s largest securities regulator, accused Robinhood of using aggressive strategies to attract inexperienced investors and failing to prevent its platform from malfunctioning.read more
He claims that the app-based service uses a strategy of using transactions as games to attract young, inexperienced customers, including reducing confetti with every transaction made on the app.
This case is the first enforcement action taken under the National Trust Rules that came into effect in September, and this action has raised the broker’s investment advice standards.
Robinhood argued in its lawsuit that Galvin lacks the authority to overturn the long-term conclusion of the Massachusetts Supreme Court that brokerage firms like itself are not considered trustees of clients.
It said that the state’s legislature did not take any action to change the court’s ruling, and he has no power to adopt his rules.
Robin Hood said that the regulations also created obstacles to federal regulations, saying that the Securities and Exchange Commission (SEC) adopted its own regulations to regulate brokerage companies in 2019, which explicitly rejected the standards implemented by Galvin.
Galvin is regarded as an aggressive state securities regulator nationwide. In a statement called a lawsuit, “this is another example of Robinhood’s total refusal to take responsibility for its customers.” .
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