Robinhood returns to court to defend position in case brought by US state regulator
Lawyers representing cryptocurrency and stock trading app Robinhood faced off against those for the secretary of the commonwealth of Massachusetts over the legality of a state regulation that could affect how the company markets itself to potential investors.
Under Secretary of the Commonwealth of Massachusetts William Galvin, the office's securities division filed a complaint against Robinhood in December 2020 alleging the platform illegally targeted inexperienced investors, claiming the practice was in violation of the state’s fiduciary duty standards. Galvin reportedly said at the time that Robinhood was marketing itself as “some sort of game that you might be able to win” and aimed to revoke the platform’s broker-dealer license in Massachusetts.
Robinhood has argued that the Massachusetts securities regulator exceeded its authority in attempting to enforce the fiduciary duty rules. In March 2022, a judge largely dismissed that position, leaving the matter on hold pending appeal, with oral arguments scheduled for May.
According to a Reuters report, Robinhood’s legal team returned to court on May 3, claiming Massachusetts law did not give Galvin “the power to make conduct that is ethical under existing federal and state law unethical simply by announcing it to be so.” Lawyers for the state office reportedly reiterated the regulator’s claims that the fiduciary duty aimed to protect investors from techniques Robinhood had allegedly used.
The case followed a tragic story from June 2020 in which a 20-year-old Robinhood investor committed suicide after seeing a $730,000 negative balance in his account — reportedly a temporary condition that could have resolved itself in time. The platform has also sometimes been the target
Read more on cointelegraph.com
