Mass. Regulator Wants Robinhood Barred From State
Chris Villani, 15 April 2021
Massachusetts’ top securities regulator said Thursday he wants Robinhood LLC barred from doing business in the Bay State, citing the stock trader’s “cavalier” approach to enticing inexperienced investors into risky bets.
Massachusetts Secretary of the Commonwealth William Galvin is seeking to amend an administrative complaint he filed against the California-based company in December, saying the original fine and change of practices he was seeking was no longer sufficient. That was the first enforcement action brought under the state’s new fiduciary rule, which is stricter than regulations imposed by the U.S. Securities and Exchange Commission.
Galvin also criticized Robinhood for filing its own suit Thursday in state court seeking to block the administrative case. In that complaint, the company argues that Galvin is overstepping his lane and that neither state nor federal law allows for the state’s fiduciary rule.
“This lawsuit is another example of Robinhood’s complete rejection of responsibility to their customers,” Galvin said in a statement. “It’s a tactic I’ve seen employed by many parties subject to enforcement actions in my tenure.”
Galvin claims Robinhood has not put the necessary safeguards in place to protect vulnerable customers on its platform.
