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May 27, 2021 at 02:14 PM
What You Need to Know
- The state has accused Robinhood of using overly aggressive tactics to lure investors.
- Robinhood filed a lawsuit in mid-April to stop the state's case and to overturn the Massachusetts fiduciary rule.
- It’s unclear where the judge will go with the fiduciary rule, according to a Galvin spokesperson.
A Massachusetts judge on Thursday denied Robinhood’s attempt to prevent the state’s securities division from proceeding in an administrative case against the brokerage firm. However, the fate of Massachusetts’ fiduciary rule is unclear.
Robinhood filed a lawsuit in mid-April to overturn Massachusetts’ fiduciary rule and prevent the state’s securities division from proceeding in its administrative case.
Secretary of state William Galvin, Massachusetts’ top securities regulator, said Thursday in a statement that he’s “pleased with this victory” and “glad that Robinhood’s attempt to block the charges brought by the Securities Division was unsuccessful.”
A spokesperson for Galvin’s office told ThinkAdvisor on Thursday, however, that based on the ruling issued by Justice Kenneth W. Salinger of the Suffolk Superior Court ”it is unclear at this time” how the judge will rule on Massachusetts’ fiduciary rule. Salinger ”has asked for additional briefing on the matter and has not yet ruled on whether to stay action on the case until after” the securities division resolves its case against Robinhood.
Robinhood said Thursday in a statement that “We are pleased that the court will address the validity of the MSD’s fiduciary rule. We stand behind our customers, and we look forward to continuing to democratize finance for all in Massachusetts and across the country.”
Galvin accused Robinhood in mid-December of violating state law by using overly “aggressive tactics to attract new, often inexperienced, investors” and “gamification to encourage and entice continuous and repetitive use” of its mobile application.
