NEW YORK (AP) – Bets on Robinhood Financial are rising in a lawsuit in Massachusetts, and regulators are asking to cancel the registration of a popular trading app broker, which effectively bans him from the state.
At the same time, Robinhaus called the complaint filed by the Office of the Secretary-General of the Commonwealth, William Galvin, elite, based on a rule that should not have been applied to him. It asks to refer the matter to a state court, not to continue working through the administrative process.
The litigation began in December when state regulators filed an administrative complaint against Robinhood, an easy-to-use program that helped bring a new generation of investors to market. The app has become so popular that the company is going to sell its shares in the market through a preliminary public offering.
In its first complaint, the Massachusetts Securities and Exchange Commission alleged that Robinhood was exploiting its clients for greater profits, not meeting the standards of conduct required by the state, which is called the “betrayal rule.” It says Robinhood has used methods to invest, such as shaking users’ screens with candy, in hopes of encouraging more sophisticated clients to make more and more deals.
The Securities and Exchange Commission said on Thursday that Robinhood’s culture had not changed since the initial application, that it “continues to lure inexperienced clients into risky trading”. As a tactic, regulators cited Robinhood as offering bonuses to customers for depositing cash into their accounts, which it said showed a “riding approach” to fulfilling its responsibilities to Massachusetts customers.
Regulators are asking an administrative hearing officer to consider canceling Robinhaus registration as a broker-dealer in the state.
On Thursday, Robinhood filed a lawsuit in Massachusetts state court asking the judge not to allow the securities department to proceed, declaring that the betrayal rule against brokers was invalid, in part because it violated state law. ,
The company also argued in court that the state’s trust rule, which requires anyone to advise solely on the client’s financial interests, should not apply to robins such as Robinhood, which does not provide investment advice. It criticized the examples given by Massachusetts regulators when accusing Robinhoe of violating the rules of betrayal, such as showing customers lists of popular stocks without considering them a proper investment.
“We do not believe our clients are naive because the Massachusetts Stock Exchange is painting them,” Robinhead said in a blog post. “It is not recommended to show a list of companies in a certain field.”
Robin Hood said that the complaint “reflects the old way of thinking. That new, younger, more diverse investors have no place in the markets. ”
Earlier this month, Robinhood stopped entertaining animated users on their screens after they made their first trade and reached other milestones, saying that animation criticism had created a distraction.