Massachusetts regulator to appeal ruling made in favor of Robinhood

Massachusetts’s securities market watchdog is planning to appeal against a ruling last year in favor of the Robinhood retail trading platform. The appeal comes after a ruling was made last year in favor of Robinhood after enforcement action was taken against the online brokerage platform in December 2020.

Massachusetts regulator to appeal a ruling made in Robinhood’s favor

Following this appeal, the Secretary of State for Massachusetts, Bill Galvin, and the Robinhood exchange argue on the validity of the fiduciary duty rule of the regulator at the Supreme Judicial Court of Massachusetts, according to a report by Reuters.

In 2020, Galvin, in an administrative action taken against Robinhood, planned to revoke the broker-dealer license for the exchange. At the time, Galvin accused the firm of failing to protect its customers and their investment.

Because of the failure of the company to have the right investor protection measures in place, Galvin accused the company of failing to comply with its fiduciary duty rule. The retail brokerage platform raised investment-advice standards for brokerage companies in early 2020.

The Secretary also said that the commission-free brokerage platform treated trading the same as a game and adopted strategies that lured young and inexperienced traders. The Secretary has also criticized the use of Confetti on the phone screen of traders after every trade has been executed.

In March last year, Judge Michael Ricciuti of the Suffolk County Superior Court in Boston ruled in favor of the Robinhood exchange. The judge argued that the federal stance on the matter was superior to the requirements of the state regulator. The judge also said that Galvin went beyond his authority as a regulator to implement laws that did not comply with federal laws.

The ruling at the time only affected part of the action taken by the Massachusetts securities regulator. The regulator could also pursue the claims of the broker engaging in unethical practices and even falling short of its duty to supervise employees.

Galvin appealed the ruling made in favor of Robinhood in February. The regulator urged the highest Massachusetts court to reverse an earlier decision made to reverse the decision made by the lower court. Oral presentations have been set for May 3, 2023.

The latest information on this matter shows that the Massachusetts supreme court would consider reviving the matter of violating the fiduciary rule. However, the lawyers at Robinhood have said that the ruling made by the lower court ascertains that Galvin did not have the authority to formulate the fiduciary rule.

Robinhood reaches a settlement with NASAA

Seven state securities regulators imposed up to a $10.2 million fine against Robinhood’s brokerage division. The regulators later settled with the exchange at the behest of the North American Securities Administrators Association (NASAA).

In February, Judge Edward Chen of the US District Court in San Francisco dismissed a lawsuit that accused Robinhood Markets of misleading retail investors during an initial public offering nearly two years ago.