The Massachusetts SEC Is Attempting to Revoke Robinhood's Broker-Dealer License
By Jamie G - Cryptocurrency Investor - 16-04-2021
According to Bloomberg, the head of the state's securities division, William Galvin, said in a recent administrative complaint that Robinhood has been continuing a pattern of enticing trading among their customers. The latest lawsuit follows a complaint lodged by Galvin's office in December 2020, claiming that Robinhood's ads inappropriately targeted novice investors.
The state cited Robinhood's recent operation, such as a promotion that offers customers cash incentives based on new deposits, as evidence of a firm culture which has not changed.
Robinhood replied to the new lawsuit, claiming that the action could deprive “millions of Bay Staters” of access to its website. The company has filed a lawsuit in Massachusetts seeking to overturn a newly enacted fiduciary rule that state regulators have accused it of violating. The law, which goes into effect in 2020, allows brokers to behave in the best interests of their clients.
“Robinhood is a ‘self-directed’ brokerage firm that does not make investment recommendations or provide investment advice.” the firm said in the complaint.
Since being involved in the contentious GameStop stop short-squeeze, Robinhood has come under increasing scrutiny from regulators and users alike. The trading group was outraged when Robinhood stopped buying GameStop stock in January 2021.
Robinhood has also been plagued by a number of technical problems, which have reportedly resulted in significant losses for traders and prompted more legal action against the firm.
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