To make their case, state regulators accused Robinhood of failing to correctly account for fractional shares traded by clients on its platform and mentioned the firm “continues to entice and induce inexperienced customers into risky trading.”
In a weblog put up, Robinhood sharply criticized what it described as “unfounded, politicized allegations and unreasonable demands” from regulators in Massachusetts and warned that revoking its license would block entry for thousands and thousands of shoppers.
“The Massachusetts Securities Division’s attempt to prevent Massachusetts residents from choosing how they invest is elitist and against everything we stand for,” Robinhood mentioned. “We don’t believe our customers are naive as the Massachusetts Securities Division paints them to be.”
Robinhood fired again by submitting a grievance and movement in Massachusetts State Court for a preliminary injunction that may cease the regulatory case towards the firm. Robinhood is arguing that the regulator’s new fiduciary rule “exceeds its authority” beneath each state and federal regulation.
“By trying to block Robinhood, the division is attempting to bring its residents back in time and reinstate the financial barriers that Robinhood was founded to break down,” Robinhood mentioned in the weblog put up.
More than simply confetti
The amended grievance filed Thursday says Robinhood has continued a sample of aggressively engaging clients, together with some with “little or no investment experience.” It cites information stories indicating Robinhood has expanded margin lending and sought to persuade clients to deposit their stimulus checks by providing “free cash” for deposits.
Robinhood’s conduct since the grievance was filed in December “poses a substantial and continued risk to Massachusetts investors,” the grievance mentioned.
Massachusetts regulators mentioned Robinhood has failed to report its fractional share commerce executions for over a 12 months, “demonstrating its inability to follow the most basic requirements” required of broker-dealers.
The combat with Massachusetts provides to an extended listing of issues Robinhood has been coping with in latest months.
And but, regardless of this turbulent stretch for Robinhood, the firm continues to develop quickly — particularly in the crypto area.