Robinhood Urges Judge to Dismiss Mass. Regulator’s Suit

Posted on May 28th, 2021 at 3:39 PM
Robinhood Urges Judge to Dismiss Mass. Regulator’s Suit

From the Desk of Jim Eccleston at Eccleston Law LLC:

On Wednesday, Robinhood LLC asked a judge to halt Massachusetts’ securities chief from continuing with an administrative proceeding intended to bar use of the trading platform in the state. Robinhood has filed suit against Massachusetts Secretary of the Commonwealth William Galvin alleging an “extraordinary overreach of his powers” after the regulator claimed that Robinhood has failed to protect novice investors pursuant to the state’s new fiduciary rule. Robinhood contends that Suffolk Superior Court Justice Kenneth Salinger should pause the case until he determines the legality Massachusetts’s new fiduciary rule, which is stricter than regulations imposed by the Securities and Exchange Commission (SEC). 

On the other hand, Galvin’s complaint argues that Robinhood has introduced “gamification” features in an effort to attract novice investors and tempt them to trade on a daily basis. In the meantime, Justice Salinger took the motion for preliminary injunction under advisement as experts claim that this case will represent a test of Galvin’s authority to broadly regulate trading in Massachusetts. Besides claiming that the fiduciary rule is invalid, Robinhood contends that the rule does not apply to self-directed brokerages that do not advise clients. 

Eccleston Law LLC represents investors and financial advisors nationwide in securities, employment, regulatory and disciplinary matters.

Tags: eccleston, eccleston law, robinhood

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