Politics & MoneyWealthtech

Massachusetts regulators look to revoke Robinhood’s broker-dealer license

Robinhood called the regulator “elitist” in a blog post

Trading app Robinhood is seeing the legal heat turn up once again. Massachusetts regulators are attempting to revoke Robinhood’s broker-dealer license alleging that the company’s platform entices inexperienced investors to do risky trades, Reuters reports.

But Robinhood struck back, and filed a complaint and motion for preliminary injunction to stave off the Massachusetts Securities Division from going forward with their administrative case against the company, it said in a blog post.

Massachusetts Secretary of State Bill Galvin announced the administrative case against Robinhood in December before the whole GameStop fiasco. Galvin has alleged that Robinhood not only lures in inexperienced investors but fails to avert outages on its trading platform.

Reuters reported that the case is the “first enforcement action brought under a state fiduciary rule that took effect in September that raised the investment-advice standard for brokers.”

Meanwhile, Robinhood, which filed for a confidential IPO, is throwing some shade back at the Massachusetts Securities Division.

“Robinhood has helped bring millions more people into our financial system, and the Massachusetts Securities Division’s attempt to prevent Massachusetts residents from choosing how they invest is elitist and against everything we stand for,” the company said in the blog post.

Robinhood countered in the lawsuit Galvin lacks authority to “override a long-standing conclusion by Massachusetts’ top court that brokerage firms like itself are not considered fiduciaries of their customers,” Reuters reported.

This isn’t the first time that Robinhood has been put underneath the legal magnifying glass and it probably won’t be the last but we’ll have to wait and see what ultimately happens.

In other wealthtech news, Guideline, a 5-year-old San Mateo-based startup that offers employers 401(k)s, said it doubled its assets under management to $4 billion year-over-year during the pandemic. The company hit a milestone of 20,000 clients in March 2021 – 7,000 of which were added during the pandemic. Kevin Busque, Guideline’s CEO, said the change afoot is the result of new ways employers are using retention tools.

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