On Thursday, regulators in the US state of Massachusetts, the seventh-smallest in the United States, had sought to revoke the Californian online broker Robinhood’s dealership license over accusation that the brokerage house was pushing forth inexperienced investors to position them on riskier assets without any kind of limit, though the Menlo Park-headquartered brokerage firm, which has been the centrepiece of a Reddit stock discussion group-led retail-frenzy, had also sued to nullify a new legislation which has been at the bottom of the case.
Nonetheless, Massachusetts’ Secretary of State Bill Galvin had filed a revised administrative case later last year to revoke Robinhood’s brokerage license. As an inevitable repercussion, the online brokerage firm, which still allows its users to trade on a fraction of a share or other assets with substantial scale of leverage, eventually making them more vulnerable to any kind of short-sell move by institutional investors, had filed a lawsuit in the State Court of Boston to counter a fiduciary standard of conduct that Galvin’s office had adopted last year.
Massachusetts’ Galvin seeks to revoke Robinhood’s brokerage license
On top of that, Massachusetts Secretary of State, Bill Galvin, had announced the case against Robinhood in December last year, before the onset of a Reddit discussion group-led retail-frenzy that literally had shaken up the Wall St.’s institutional traders and led to a boom in the shares’ prices of Gamestop, AMC Entertainment and others, which were heavily shorted by institutional investors.
Nonetheless, followed by Gavin’s latest move to seek a revocation of Robinhood’s trading license citing the broker’s aggressive tactics to lure in inexperienced investors and its failure to prevent outages multiple times, Robinhood said in a statement late on Thursday, “We don't believe our customers are as naive as the Massachusetts Securities Division paints them to be”.