Massachusetts regulators demanded the revocation of Robinhood’s broker-dealer license on Thursday, encouraging inexperienced investors to do unlimited risky business, while online brokerage filed a lawsuit to break a new rule underlying the lawsuit.
Massachusetts Secretary of State Bill Galvin filed a recall in a revised administrative case released shortly after Robinhood sued Robinhood in state court in Boston, defying the standards of behavior adopted by his office last year.
Robinhood wants to go public with an initial public offering in a blog post known as Regulator Elite and says he wants to rebuild the financial barrier Robinhood has set up to break it.
In December, Galvin announced the lawsuit against Menlo Park in Robinhood, California, saying that social media-driven rallies in stocks such as GameStop, driven by retail investors using Robinhood and other apps, increased share prices.
The state’s top securities regulator, Galvin Robinhood, has been accused of using aggressive tactics to attract inexperienced investors and failing to stop them from getting stuck on their platform.
He complains that the app-based service uses business-like strategies to persuade young, inexperienced customers with little rain for every business in the app.
The lawsuit was the first law enforcement action to take effect in September, raising the standard of investment advice for brokers.
In the Robinhood case, he argued that Galvin lacked the right to present to the Massachusetts Supreme Court a long-term ruling that brokerage firms like him were unreliable for their clients.
He said the state legislature did nothing to change the court’s decision and had no power to govern.
Robinhood said the U.S. Securities and Exchange Commission adopted its own rules governing brokerage firms in 2019, effectively rejecting Standard Galvin, that the rule poses an obstacle to federal control.
Galvin, viewed nationally as an aggressive state securities regulator, said in a statement that the case is another example of Robinhood’s total rejection of its clients.